Monday, 6 May 2013

Soligenix's buy rating backed by Brean Capital amid "several positive developments" in Q1

Soligenix (OTCBB:SNGX) had its buy rating reiterated by Brean Capital's Jonathan Aschoff on Monday, following the biopharmaceutical company's release of first quarter results last week, which saw "several positive developments" over the period, according to the analyst report. 
The company is set to start a phase 2 randomized, double blind, placebo-controlled study of SGX942 - its lead compound - for oral mucositis in head and neck cancer patients in the second half of this year. 
Meanwhile, in its biodefense business last week, the company inked a collaboration agreement with Intrexon Corp, under which Soligenix licensed Intrexon's antibody discovery, isolation and production technologies to develop a human monoclonal antibody therapy for melioidosis - a biodefense threat and serious infectious disease. 
"We believe the collaboration underscores the capability of the biodefense at Soligenix. In addition, Soligenix presented its biodefense vaccine programs at the World Vaccine Congress in April 2013, highlighting its ThermoVax technology to produce thermostable RiVax and VeloThrax vaccines that do not require storage at refrigerated temperatures," noted Aschoff in the emailed report on Monday. 
For vaccines that are intended for long-term stockpiling, such as for use in biodefense or in pandemic situations, Soligenix has said that the use of ThermoVax, which has been tested in combination with the company's RiVax and VeloThrax vaccines, can lead to easier storage and the distribution of strategic national stockpile vaccines in emergency situations.
Aschoff also highlighted the submission of a contract proposal to the Biomedical Advanced Research and Development Authority (BARDA) in the first quarter, to support the development of OrbeShield. OrbeShield, also a part of Soligenix's biodefense platform, is being developed by the company to treat gastrointestinal acute radiation syndrome (GI ARS), which occurs after toxic radiation exposure and involves several organ systems, notably the bone marrow, the gastrointestinal tract and later, the lungs.
"The proposal can potentially lead to a multi-year, multi-million dollar grant from BARDA to support the development program of OrbeShield in GI ARS, which was granted IND clearance, Fast Track Designation, and Orphan Drug Designation from the FDA in January 2013," said the analyst. 
In terms of financials, the company reported grant revenue for the first quarter of $0.9 million, up from $0.6 million in the year-ago period, and a loss per share of 10 cents. Higher grant revenue was mainly driven by reimbursable costs from the government-funded ThermoVax program. 
Brean's Aschoff notes that the most important financial metric for the company at present, however, is that it ended the first quarter with about $2.6 million in cash and equivalents, and has filed to raise capital in the near term. 
Research and development and selling, general and administrative expenses were $0.8 million and $0.7 million, respectively, in the first quarter - in line with Brean Capital's expectations.
Aschoff stood by his $5 target price on the company, which is based on a 5x multiple of the projected 2019 EBITDA of $103 million. 
Shares of Soligenix are currently trading at $1.44 on Monday, up 140 per cent since the start of the year. 

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