Wedbush: Restorbio's Therapy For Aging-Related Diseases Has Best-In-Class Potential

Clinical stage biopharma company resTORbio, Inc. TORC's TORC1 inhibition program uses a protein called serine/threonine kinase that aims to regulate aging and aging-related diseases conditions without undesirable side effects.

The Analyst

Wedbush analyst Robert Driscoll initiated coverage of resTORbio shares with an Outperform rating and $30 price target.

The Thesis

Restorbio's potential best-in-class TORC1 inhibition program — with an initial focus on reducing respiratory tract infections in the elderly — has the potential to be an effective geroprotection strategy for numerous chronic diseases that are contributing to high and rapidly rising health care costs, Driscoll said in a Tuesday note.

"TORC1 inhibitor RTB101 is licensed from Novartis AG (ADR) NVS and has demonstrated statistically significant and clinically meaningful improvements in immune function and reduced incidence of infections in the elderly as monotherapy and in combination with everolimus," the analyst said.

The positive Phase 2a safety and efficacy data is a strong support for the ongoing Phase 2b study of RTB101 and the RTB101-everolimus combo, Driscoll said. A readout on the study is likely to arrive in the second half of 2018, and positive data from the study could pave the way for approval as early as 2021, the analyst said.

Wedbush said it is initially valuing the company on the respiratory tract infection indication among very elderly and elderly patients with comorbidities. The research firm projects large upside in additional indications that are supported by strong preclinical data. 

Restorbio expects to initiate at least one other Phase 2 study in one of these indications in 2018, Driscoll said. 

The Price Action

Restorbio offered 5.67 million shares in a Jan. 26 IPO at $15 per share. After listing at $18.62, the stock closed its debut session at $16.88, up 12.55 percent from the offer price.

Since the listing, the stock has gained more than 15 percent.

At the time of writing, the stock was up 5.01 percent at $19.70.

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