43% Upside Seen For Dova Pharma Following Competitor Product's Poor Results

Analysts at Leerink turned bullish on Dova Pharmaceuticals Inc DOVA after a competitor to the clinical-stage pharmaceutical company reported disappointing results from a phase 3 trial.

Japan-based Shionogi announced Monday that a phase 3 trial investigating thrombopoietin receptor agonist lusutrombopag for the treatment of thrombocytopenia in patients with chronic liver disease undergoing an invasive procedure, Leerink's Geoffrey Porges highlighted in a research report. Lusutrombopag happens to be from the same class of drugs compared to Dova's avatrombopag and is pursuing an identical indication in a similar trial.

Shionogi's prior results showed better efficacy compared to Dova's avatrombopag trials but the Japan company's results which were released on Monday now showed a 36 percent placebo adjusted rate difference for the primary endpoint, the analyst continued (see his track record here). This new data is "significantly worse" than prior studies and now compares unfavorably versus Dova's ADAPT-1 and ADAPT-2 phase 3 trials of avatrombopag.

"Numerically Dova's two international phase III trials showed better efficacy on their primary endpoint and greater difference from placebo than Shionogi's," Porges explained. "Dova achieved its results with a 5-day schedule, compared to the 7-day schedule for lusutrombopag. This leaves Shionogi with a drug that has a longer treatment duration (7 days vs 5 days), inferior efficacy (regardless of differences in studies and populations, lusutrombopag's efficacy claim will have a smaller number than avatrombopag's), likely later approval, and inconsistent results between studies."

As a result, the "best case" scenario for Dova has now improved and the company's projected market share for lusutrombopag was revised higher from 40 percent to 50 percent. The improved market share projection, coupled with new expectations for incremental cash flow, revenue and earnings prompted the analyst to upgrade Dova's stock rating from Market Perform to Outperform with a price target raised from $24 to $32.

Earnings Scheduled For September 26, 2017

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