SVB Leerink starts Tocagen at MP; PT $11


SVB Leerink initiated coverage of Tocagen (NASDAQ:TOCA) with a “market perform” rating and $11 price target. The stock closed at $10.26 on April 12.

Tocagen is advancing a cancer-selective gene therapy platform that is designed to deliver therapeutic genes into the DNA of cancer cells and activate a patient’s immune system against their own cancer from within.

Analyst Daina Graybosch writes that she remains unconvinced that the company’s drug candidates, Toca 511 plus Toca FC, plus surgery would be successful in recurrent high-grade gliomas.

Among other things, she cited a Phase 1b signal from a “Phase 3-eligible” subpopulation, which was “created post-hoc without clear biologic rationale,” for her view on the Tocagen’s brain cancer program.

She also said there is limited pharmacokinetic and pharmacodynamic data for Toca 511 plus Toca FC in humans; a dismal history of Phase 3 trials in glioblastoma; and risk that the TOCA5 Phase 2/3 registration trial will be under-powered to show benefit.

However, Ms. Graybosch said the stock has an option value for an investor willing to take on risk for significant upside; a few signals do indicate the Phase 2/3 trial success is a possibility; a centrally confirmed 22% complete response rate demonstrates that Toca 511 plus Toca FC has clinical activity; the physician community is enthusiastic about the program because of the rapid Phase 2/3 enrollment; and NRG Oncology’s selection of Toca 511 plus Toca FC for its next GBM trial.

Stephen Kilmer