Abeona Therapeutics Has First-Mover Potential In Rare Diseases, Seaport Says In Bullish Initiation

Abeona Therapeutics Inc ABEO, which employs gene and cell therapy for potential rare disease treatments, has a favorable risk-reward profile, according to Seaport Global Securities.

The Analyst

Analyst Vernon Bernardino initiated coverage of Abeona Therapeutics with a Buy rating and $29 price target.

The Thesis

Abeona's adeno-associated virus serotype 9, or AAV9-based technology, has generated six candidate gene therapies in preclinical or clinical stage optimization, Bernardino said in a Tuesday note. The company's gene therapies are likely to be first movers in each therapeutic indication, the analyst said. 

Rare diseases — defined as those affecting less than 200,000 people — number roughly 7,000, with a treatment option only existing for 7 percent of these, Bernardino said.  

Investment in rare disease gene therapy carries the potential for high returns due to the strong premium pricing potential, the analyst said. 

Since rare diseases affect fewer people, the size of clinical trials is small, which lowers hurdles on the regulatory pathway and makes clinical development faster and less costly, Bernardino said. 

Seaport Global expects the initiation of Abeona's Phase 3 study evaluating EB-101 for a skin disease, recessive dystrophic epidermolysis bullosa, in the second half of 2018. FDA approval is likely in 2020, the analyst said.

ABO-102, which is likely to be the next product to complete clinical trials, is being developed for mucopolysaccharidosis. Novel therapies currently available for this indication command premium pricing and rake in $1 billion or more in sales annually, the analyst said. 

"Thus, we think current ABEO prices are attractive entry points that favor capturing upside from expected near-term milestones." 

The Price Action

Abeona shares were rallying 9.66 percent to $17.02 at the time of publication Tuesday afternoon.

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