Arvinas TPD Therapies Have Great Potential, Guggenheim Says In Bullish Initiation

Arvinas Inc ARVN shares have been on a tear ever since the company issued a platform update in late October.

The Analyst

Guggenheim Securities analyst Michael Schmidt initiated coverage of Arvinas with a Buy rating and $50 price target. 

The Thesis

Arvinas, a small-cap, early clinical-stage biotech, is focused on developing PROTAC-based targeted protein degradation therapies, an emerging therapeutic modality of great potential, Schmidt said in a Monday note. (See his track record here.)

TPD therapies, according to the analyst, have potential advantages over traditional inhibitors with respect to "dosing, potential side effects, drug resistance mechanisms and ability to address undruggable targets," the analyst said. 

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The company has two early stage assets in the pipeline: ARV-110, an androgen receptor degrader for treating metastatic castration-resistant prostate cancer, or nCRPC; and ARV-471, an estrogen receptor degraded for treating ER+/HER2- breast cancer patients.

Initial data for ARV-110 is due in the first half of 2020 and ARV-471 data is due in the second half of 2020, Schmidt said. 

"ARVN is taking a conservative, step-wise approach towards clinical development that may mitigate some near-term development risks, in our view," the analyst said. 

Guggenheim's base-case scenario assumes peak sales potential of $1.5 billion in PoS-adjusted worldwide sales of ARV-110 and ARV-471 in 2037, with $800 million attributable to the former and the rest to the latter.

Additionally, Schmidt sees PROTAC for neurology indications, additional partnerships and rest of the pipeline serving as potential sources of upside from its current valuation.

Price Action

Arvinas shares were trading 0.32% higher at $34.78 at the time of publication Monday. 

Related Link: Benzinga's Top Upgrades, Downgrades For November 25, 2019