HCW starts Sol-Gel at buy; PT $21

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H.C. Wainwright initiated coverage of Sol-Gel Technologies (NASDAQ:SLGL) with a “buy” rating and price target of $21. The stock closed at $6.97 on July 13.

The company's lead drug candidates, TWIN and VERED, are aimed at the treatment of moderate-to-severe acne vulgaris and papulopustular rosacea, respectively. Both agents are in late-stage development: TWIN is slated to enter pivotal testing in the coming months, while enrollment in the pivotal trial program for VERED started several weeks ago, writes analyst Raghuram Selvaraju.

According to forecasts, both TWIN and VERED could report top-line pivotal data in 2020 and reach the U.S. market in 2021, he added. 

Mr. Selvaraju said the acne vulgaris space constitutes an attractive opportunity due to its sheer size, with total branded Rx sales of more than $3-billion in 2016 alone. The target patient population within the U.S. market is estimated at 50 million people. 

For rosacea, he figures the target market in the U.S. to constitute roughly $1-billion in branded prescription value annually, with the top brand market share held by topicals. 

“Our projections assume that peak TWIN sales may approach $260-milion by 2028, while VERED, with a proposed trade name of Epsolay, might reach peak sales of $785-million in 2027, given the less populated competitive landscape in this indication,” he added.

Stephen Kilmer