Roth starts Kalvista Pharma at buy; PT $20

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Roth Capital Partners launched coverage of Kalvista Pharmaceuticals (NASDAQ:KALV) with a “buy” rating and price target of $20. The stock closed at $8.82 on July 9.

Analyst Jotin Marango writes that behind its cultivated low profile in the biotech arena, Kalvista has deep expertise in kallikrein inhibitors, and a thoughtful and differentiated development strategy. 

“We expect the shares to outperform following upcoming updates from the clinical programs in hereditary angioedema (HAE) and diabetic macular edema (DME),” he added. 

Mr. Marango said that to date, Kalvista has played its HAE cards close to the vest. However, with two oral kallikrein inhibitors now in Phase 1 development, “we believe that the time for market anonymity is coming to an end. We like the company's strategy of advancing multiple early candidates: it front loads development time and risk at low cost, while building opportunity to later divide and conquer different HAE segments.” 

Regarding DME, heviews DME value “pragmatically as potential upside,” because of the novelty of kallikrein as a DME target, 12-plus months to Phase 2 data, and the crowded competitive landscape. 

However, Mr. Marango said that Merck's $715-million option to acquire the program is not only validation for Kalvista’s discovery machine, but also a potential source of meaningful future non-dilutive capital for the HAE program. 

“We guide investors to keep an eye for a corporate update around the end of July, in line with the end of Kalvista's fiscal year,” he added. “Specifically, we will look for progress updates from both the HAE and DME programs.”

Stephen Kilmer