Ladenburg starts Novus Therapeutics at buy; PT $12

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Ladenburg Thalmann launched coverage of Novus Therapeutics (NASDAQ:NVUS) with a “buy” rating and $12 price target. The stock closed at $4.53 on Sept. 10.

Novus is developing a novel treatment for otitis media (OM), which affects some 13 million American kids a year, but finding acceptable treatments has been elusive, writes analyst Michael Higgins.

Novus’ lead candidate, OP-02, is a synthetic surfactant aerosol, self-administered to the nasal cavity through the nose to facilitate Eustachian tube (ET) opening, clear ET fluid, normalize middle ear pressure and lower ET surface tension.

“In our view, OP-02 should gain some adoption by those with acute OM but should be widely adopted by the approximately 700,000 patients with chronic and recurrent OM that are resorting to tympanostomy tube surgery,” he added.

Following encouraging results in preclinical and human case studies, OP-02 is expected to enter a Phase 1 trial in the second half of 2018, with data by mid-2019.

“With its faster relief and benign safety profile versus antibiotics and surgery, we believe OP-02 will gain significant market share in this blockbuster indication,” according to Mr. Higgins. “Given the clinical investment and development risk, we believe Novus’ novel approach and market opportunities are not yet understood by investors.”

Stephen Kilmer