In a Jan. 25 research note, analyst Jerry Isaacson reported ROTH Capital Partners initiated coverage on AzurRx BioPharma Inc. (AZRX:NASDAQ) with a Buy rating and a $10.50 per share target price. The company is currently trading at around $2.02 per share.
AzurRx is developing recombinant enzyme therapies targeting conditions associated with chronic pancreatitis, cystic fibrosis and beta-lactamase, Isaacson explained. Its lead candidate MS1819 is an acid-resistant, recombinant lipase derived from the yeast strain Yarrowia liolytica, which helps with digestion of fats.
The company is developing MS1819 as a pancreatic enzyme replacement therapy (PERT) for the treatment of exocrine pancreatic insufficiency in cystic fibrosis patients. (PERTs are the current standard of care for patients with this condition.)
In that indication, AzurRx is currently evaluating MS1819 in a Phase 2 trial in 30 patients. The first data from that study are expected in H1/19.
Previously announced results from the Phase 2a trial of MS1819 in the same indication were "positive," noted Isaacson. The therapy met the safety endpoint and resulted in a statistically significant improvement in coefficient fat absorption of 21.8% (p=0.002) and a maximum improvement of 57%.
Isaacson highlighted that MS1819 has "numerous potential advantages over currently approved treatments," and "the potential to be the first differentiated PERT." For instance, today's PERTs require patients to take 38 pills a day, but MS1819 only requires five. Unlike other PERTs, MS1819 is not derived from pigs, or from any other animal, allowing patients who prefer nonanimal-based therapeutics, for various reasons, to use it.
Isaacson discussed the opportunity for MS1819 in the current PERT landscape. The size of the PERT market is larger than an estimated $1.2 billion annually and is growing. Since 2013, it expanded at a 19% compounded annual growth rate.
The analyst described ROTH's base case commercialization scenario for MS1819. After conducting Phase 3 trials in 2020 and 2021, AzurRx would submit a biologics license application in 2021 for a label specifying treatment of exocrine pancreatic insufficiency in cystic fibrosis patients. MS1819 would cost a minimum of about $18,000 per year per patient, in accordance with other PERT pricing. By 2030, AzurRx would generate an estimated $190 million from the therapy in that one indication.
Along with MS1819, AzurRx is developing AZX1103, an oral enzyme that degrades beta-lactam antibiotics in the stomach, "protecting the patient's microbiome" and thereby preventing hospital-acquired infections and antibiotic-associated diarrhea, Isaacson noted.
There is "a large unmet medical need and a significant market opportunity" for such a therapeutic, Isaacson pointed out. Three percent of hospitalized patients developed an infection in 2015, resulting in about 72,000 deaths and costs of up to $11 billion, according to the Centers for Disease Control. In 2016, hospital-acquired C. difficile infections alone totaled 246,000.
As for the market opportunity, the most often used beta-lactam antibiotic, piperacillin-tazobactam, accounted for 10.8% of all antibiotics used in hospitals in 2011.
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Disclosures from ROTH Capital Partners, AzurRx BioPharma Inc., Company Note, January 25, 2019
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
ROTH makes a market in shares of AzurRx BioPharma, Inc. and as such, buys and sells from customers on a principal basis.
Shares of AzurRx BioPharma, Inc. may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.
