HCW starts Histogenics at buy

H.C. Wainwright initiated coverage of Histogenics (NASDAQ:HSGX) with a “buy” rating and price target of $3.50, saying the company has an innovative product with significant market potential. The stock closed at $1.58 on Dec. 16.

Histogenics is developing novel regenerative therapies to address muscular-skeletal conditions. The company’s lead product, NeoCart, is an autologous, live-cell synthetic tissue implant manufactured from a patient’s own bone cells and is used to repair cartilage defects in the knee.

For decades, the standard of care for knee cartilage restoration has been microfracture surgery, which tends to take very long to heal, up to two years or more, and have inconsistent results.

Analyst Swayampakula Ramakanth writes that NeoCart, on the other hand, could help alleviate pain and restore function in three-to-12 months and is manufactured to precise specifications for each patient.

The company is currently conducting a registration-directed Phase 3 study evaluating the use of NeoCart versus microfracture as first-line treatment for knee cartilage injury, with top line results expected in 2018.

“We believe that NeoCart could become a first-in-class treatment with a $3-billion dollar market opportunity in the U.S, alone,” Mr. Ramakanth said. “We expect NeoCart to reach the market in the U.S. in 2019 and achieve risk-adjusted revenues of $144-million by 2027,” he added.