AC Immune Is An Alzheimer's Pure Play With A Lot On The Line

Credit Suisse initiated coverage of AC Immune Ltd ACIU with an Outperform rating and an $18 price target.

Alzheimer's Pure Play

Analyst Alethia Young noted that the company's lead product crenezumab is in a late-stage trial in partnership with Roche Holding Ltd. (ADR) RHHBY. Along with crenezumab, the company is developing other assets, which provide it optionality with early Alzheimer's disease targets like Tau or AD vaccines, the firm said.

High Risk/High Reward Story

Credit Suisse views the story as high risk/reward in the near term, premised on three reasons. While noting that no AD asset is exactly the same and the designs are different too, the firm said it is uncertain of the failure of Eli Lilly and Co LLY solanezumab would mean all other drugs fail.

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The firm expects AC Immune and Biogen Inc BIIB to go ahead with their studies, even if Eli Lilly's fail completely. Credit Suisse also indicated that AC Immune has other assets that could be used in combination or separately from crenezumab.

Upcoming Catalysts

Credit Suisse believes the most important AC Immune specific catalyst is the publication of higher dose of crenezumab data.

• Since Roche controls the publication, the firm is uncertain when the publication will occur, although it surmises that it might occur by key AD meeting called CTAD scheduled for December 8–10, 2016.
• The firm also expects some early data on other programs later this year and early data on Tau vaccine partnered with Janssen in 2017. Tau Phase 2 trial is set to being in 2017, the firm noted.

Highs/Lows

Credit Suisse believes AC Immune could trade at $20 to $23 per share if data supports amyloid hypothesis but could drop down to $6-$9 if amyloid hypothesis is proved irrelevant.

At last check, the shares of the AC Immune were up 3.19 percent at $14.89.

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