Analyst: AveXis M&A Could Support Interest In Regenxbio

Regenxbio Inc RGNX rode a tailwind Monday from the announced acquisition of its partner AveXis Inc AVXS, and the benefits may keep coming.

The Rating

Chardan analyst Gbola Amusa reiterated a Buy rating on Regenxbio and increased the price target from $85 to $90.

The Thesis

AveXis’ sale to Novartis AG (ADR) NVS bodes well for Regenxbio, a stakeholder in AVXS-101, Amusa said in a Monday note. (See the analyst's track record here.)

“We believe the size of the AveXis deal may mean consensus is underestimating the impact of AVXS-101 royalties on REGENXBIO, which could begin to be paid as early as 2018 (blue skies) and drive profitability for RGNX in 2019,” the analyst said.

At the same time, the AveXis buyout positions Regenxbio for a merger of its own, according to Chardan.

Amusa said he expects Novartis to be a continued consolidator in the AAV-based gene therapy space, and Regenxbio’s Phase 1/2 data for wet age-related macular degeneration is seen to be “one of the most important results in vector gene therapy” this year.

“We believe REGENXBIO would go into play if the upcoming datasets are robust,” Amusa said, noting that wet AMD is a key market for Novartis.

Chardan's price target represents 177-percent upside to Regenxbio's share price at midday Monday.