Baird: Prospects For Proteostasis Therapeutics' PTI-428 Are Not Priced Into The Stock

Even after Wednesday’s 31-percent run, a Baird analyst forecast 300-percent upside to Proteostasis Therapeutics Inc PTI.

By the analyst's assessment, the market hasn’t fully appreciated the biotech’s PTI-428 candidate.

The Rating

Baird Equity Research analyst Brian Skorney reiterated an Outperform rating on Proteostasis with a $25 price target.

The Thesis

PTI-428 secured orphan drug designation for cystic fibrosis, and the Wednesday announcement catalyzed a sharp — albeit short-lived — pop in the Proteostasis stock.

The same drug will deliver multiple data readouts throughout the year, and management will soon initiate a combination study with Symdeko that has New Drug Application potential, Skorney said in a Thursday note. (See the analyst's track record here.)

“We think initiation of this study could encourage investors to take a second look, as it puts PTI-428 on a similar development time frame as VRTX’s] VX-659, a prospect that we do not believe is currently considered in the stock price and should help drive shares higher as this comes closer to fruition,” the analyst said. 

Baird is unconcerned with Proteostasis’ apparent deprioritization of the PTI-428 and Kalydeco combination study, which is still enrolling patents but is not expected to release results in the near future. 

The second quarter will see data on PTI-801 as well as the launch of a PTI-801, PTI-808 and PTI-428 triple-combination study.

“We expect burn to accelerate as the company ramps up these clinical studies but should be able to report a number of key data points before coming back to the capital markets,” Skorney said. Proteostasis ended 2017 with $74.5 million in cash on hand, the analyst said. 

Price Action

Proteostasis was down 2.4 percent at the time of publication Friday morning. 

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