Gene therapy is an emerging therapeutic area, and Axovant Gene Therapies Ltd (NASDAQ: AXGT) is an attractive play on the sector, according to Baird.
Brian Skorney upgraded Axovant from Neutral to Outperform and lowered the price target from $16 to $13.
Axovant's multiple opportunities to find an efficacious gene therapy make it an attractive investment ahead of data readouts scheduled for the fourth quarter, Skorney said in a Monday note. (See his track record here.)
The analyst said the simplistic approach used by AXO-AAV-GM1 in gangliosidosis - usage of well-known AAV9 vector and the IV route of administration - improves the chances of its clinical success.
The company will likely pursue an abbreviated approval path, he said.
The commercial uptake will likely be robust given the lack of approved therapies for patients with GM1 gangliosidosis, Skorney said.
The second gene therapy program holds promise in the future despite the modest effect observed in the first patient doses in Axovant's ongoing AXO-AAV-GM2 trial, the analyst said.
The slight dosing change the company effected in the second patient may help enhance the early positive signal seen in the first patient, he said.
If the results from the second dose cohort in the AXO-LENTI-PD study are positive, Baird expects AXGT shares to trade significantly higher given the valuation gap between Axovant and Voyager Therapeutics Inc (NASDAQ: VYGR), its key competitor.
Success in any of the company's three gene therapy programs would represent significant upside to today's value, Skorney said.
Baird trimmed its price target to account for the likely dilution in shares that might be necessary to fund future development of the programs.
Axovant shares were higher by 3.79% at $6.57 at the close Monday.
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