Four Reasons Behind BofA's Bullish Restorbio Initiation

Clinical-stage biopharma resTORbio, Inc. TORC went public Jan. 26, offering 5.67 million shares at $15 each. 

The Analyst

Bank of America Merrill Lynch analyst Tazeen Ahmad initiated coverage of Restorbio shares with a Buy rating and $23 price target.

The Thesis

Restorbio's lead asset RTB101, which targets the mTOR pathway, is in a Phase 2b clinical trial to reduce respiratory tract infections in the elderly, Ahmad said in a Tuesday note. Restorbio is an attractive investment opportunity for the following reasons, the analyst said: 

• Its pipeline, which addresses significant unmet needs to improve weakened immune systems among the elderly.
• Prior Phase 2a data showing favorable efficacy and safety data for RTB101 in treating respiratory tract infections. 
• Its potential for expanding the label to include central nervous system and cardiovascular diseases.
• A novel mechanism and the most advanced immunosenescence-targeted clinical program.

BofA estimates risk-adjusted peak sales of $447 million for RTB101 in 2031. The Phase 2b readout in the second half of 2018 and the potential to expand RTB101's opportunities could drive significant upside to BofA's estimates, Ahmad said. 

In a blue-sky scenario, BofA expects Restorbio shares to be valued at $66.

The Price Action

Restorbio shares were up 3.94 percent at $19.50 at the close Tuesday. 

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