Unity Biotech Is A Buy On 'Novel Biology,' Morgan Stanley Says In Positive Initiation

Unity Biotechnology Inc UBX has fallen 22 percent since its May 3 initial public offering. Nonetheless, three sell-side firms initiated price targets implying significant upside Tuesday.

The Rating

Morgan Stanley analysts Matthew Harrison and David Lebowitz initiated coverage on Unity with an Overweight rating and $25 price target.

The Thesis

The analysts are inspired by “novel biology” and compelling preclinical data.

Unity hypothesizes that it can heal chronic illness such as osteoarthritis and eye disease by eliminating non-dividing cells that otherwise drive inflammation through protein build-ups. It recently released preclinical data demonstrating a 35-percent increase in mice longevity with no sign of arthritis and fewer instances of cataracts.

“While [the] initial focus of knee arthritis is narrow, we believe proof-of-concept could lead to platform validation,” the analysts said in a note. 

Clinical data on osteoarthritis is expected as soon as the first quarter of 2019 and could catalyze stock movement, according to Morgan Stanley. 

Unity Biotechnology also intends to file Investigational New Drug applications next year to expand the platform.

Price Action

Unity shares were up 0.15 percent at $13.02 at the close Tuesday.

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