H.C. Wainwright’s Take On Nivalis Therapeutics Inc (NVLS) Clinical Trial Setback


Nivalis Therapeutics Inc (NASDAQ:NVLS) investors are heading for the hills after the drug maker reported that the Phase 2 study of cavosonstat as an add-on to Orkambi in CF patients with F508del missed its primary endpoint. Shares of Nivalis are currently trading $2.59, down $3.66 or -59%.

In reaction, H.C. Wainwright analyst Andrew Fein slashed the price target to $6.00 (from $30.00), while reiterating a Buy rating on the stock.

Fein commented, “While there was an encouraging transient effect on sweat chloride (consistent with past studies), and a signal on BMI (suggesting possible effects on GI), we believe that it will be challenging for the company to continue leveraging cavosonstat for value. We are not making a call on the ongoing SNO-7 study (cavosonstat as add-on to Kalydeco), with data expected in 1Q17. Instead, we are taking a step back to consider what (if anything) may still hold or unlock value if we take cavosonstat completely out of the picture. In our view, a fair valuation would have to include cash (~$60M expected by year end), as well as the company’s knowhow in CF development, which we have repeatedly highlighted as advanced compared to its peers. Specifically, cavosonstat may have been a faulty asset, but a better asset could have a better chance of success in the hands of the Nivalis team.”

Bottom line, “Even if we take cavosonstat completely out of the picture, we believe that Nivalis stock deserves an optionality premium beyond its cash reserve.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Andrew Fein has a yearly average return of 5.9% and a 47% success rate. Fein has a -28% average return when recommending NVLS, and is ranked #603 out of 4239 analysts.

Out of the 5 analysts polled by TipRanks, 4 rate Nivalis Therapeutics stock a Hold, while 1 rates the stock a Buy. With a return potential of 24%, the stock’s consensus target price stands at $3.25.

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