Echelon cuts Arbutus Biopharma to hold; maintains PT at $12.25

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Echelon Wealth Partners downgraded Arbutus Biopharma (NASDAQ:ABUS) to “hold” from “speculative buy” with a price target of $12.25 based on valuation. The stock was quoted at $11.40 at midday on July 27.

Analyst Doug Loe writes that Arbutus’ co-development partner, Alnylam Pharmaceuticals (NASDAQ:ALNY), has reported that the European Committee for Medicinal Products for Human Use (CHMP) rendered a positive opinion on the approvability of Alnylam’s lipid nanoparticle (LNP)-formulated transthyretin (TTR)-targeted short interfering RNA (siRNA) drug, ALN-TTR02, which is also called patisiran.

“Positive CHMP review solidly reduces regulatory risk for what is Alnylam’s (and Arbutus’) lead siRNA formulation,” he added. “The drug, if approved, as it now appears, could be when the European Medicines Agency reviews the drug’s documentation later in the fiscal third quarter of 2018.”

Mr. Loe said Arbutus has undergone dramatic share price appreciation in recent trading sessions and is up about 129% year-to-date, “solidly rewarding our patience on how regulatory advances on siRNA/LNP could be revealed through clinical data and regulatory regard in future periods.”

But despite a positive view on how CHMP’s regard for patisiran reflects positively on siRNA/LNP in general, “we believe Arbutus is approaching fair value at near our $12.25 price target and, with current price levels corresponding to a 6.1% total return, we are taking this opportunity to reflect favorably on Arbutus returns already generated year to date.”

Melane LaBelle Sampson