Ladenburg starts Exicure at buy; PT $18

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Ladenburg Thalmann launched coverage of Exicure (OTCQB:XCUR) with a “buy” rating and $18 price target. The stock closed at $5.65 on July 10.

Exicure is developing first-in-class spherical nucleic acid (SNA) therapeutics, which consists of densely packed synthetic nucleic acid oligonucleotides radially arranged outside on a nanoparticle core.

Analyst Wangzhi Li writes that Exicure has discovered that this spherical 3D structure leads to transformational new properties that can address current key challenges in developing nucleic acid therapeutics (NAT) with a high cellular uptake through natural scavenger receptors-mediated endocytosis, compared with limited uptake of linear NAT; broad tissue applicability; stability without chemical modifications; and versatility to deliver both DNA and RNA.

He said the company has built a broad IP portfolio protecting SNA technology, and has developed a large pipeline of SNA products for indications in dermatology, immunology, oncology, neurology, ophthalmology, respiratory and gastrointestinal diseases.

Lead programs, XCUR17, a topical gel for down-regulating IL-17RA expression in psoriasis skin, and AST-008, a TLR9 agonist for immuno-oncology, are in Phase 1 trials with data readout in the third quarter of 2018. “Exicure’s SNA version of Spinraza also showed superior efficacy in a preclinical spinal muscular atrophy model and expects to start a clinical study in 2019,” he added.

Mr. Li said NAT is a rising drug class to address a variety of diseases, as shown by the approval of Spinraza and Exondys 51. “We believe Exicure has the potential to become a powerful player in the rising NAT space,” he said, adding that the company recently went public and is currently trading at a market cap of about $220-million.

“We believe Exicure is currently under-recognized and undervalued, as both our conservative sum-of-the-parts valuation and comparable company valuation indicate a valuation of more than $660-million,” Mr. Li said. “We believe Exicure presents an attractive investment opportunity with multiple near-term catalysts in the third quarter of 2018 and significant appreciation potential,” he added.

Sydney Stewart