SVB Leerink starts Axcella Health at OP; PT $21

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SVB Leerink initiated coverage of Axcella Health (NASDAQ:AXLA) with an “outperform” rating and a $21 price target. The stock closed at $14.27 on May 31.

“We are intrigued by Axcella’s proprietary amino acid optimization and formulation platform, but our positive view of Axcella is mainly based on the demonstrated clinical utility of the company’s proprietary amino acid mixture medicines, AXA1665 and AXA1125, for hepatic cirrhosis and NASH respectively,” writes analyst Geoffrey Porges.

In earlier randomized placebo controlled studies, the two products showed consistent benefit on biomarker and clinical endpoints, and both have now advanced into larger studies, which should read out in 2020.

“These studies are the most important catalysts for the stock and the first - (hepatic encephalopathy prevention with AXA1665) - should be disclosed in the first half of the year,” Mr. Porges said.

Axcella’s other programs in pediatric nonalcoholic steatohepatitis (NASH) and adult muscle wasting (myopenia) could add more value if they advance into expanded trials or are included in external collaborations, he added.

Stephen Kilmer