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Bank of America has initiated coverage on AlloVir, a clinical-stage biotechnology company specializing in cell therapies for immunocompromised patients, with a Buy rating and a $17 price target.
In a note Friday, the analysts cited the company’s promising platform and pipeline, led by its lead asset posoleucel, a type of cell therapy designed for the prevention and treatment of viral infections in immunocompromised patients.
Backed by robust Phase 2 proof-of-concept data and driven by a high unmet medical need, posoleucel is seen as having “compelling yet underappreciated” upside potential, according to analysts.
Bank of America’s projections indicate a promising outlook for posoleucel, with a projected valuation of $1.5 billion by 2030 compared to the consensus estimate of $1.3 billion. This projection is underpinned by three pivotal studies in progress that could drive a near-term re-rating of the company’s value, with data from these studies anticipated in mid-2024.
That said, a key concern for analysts is pricing, particularly due to the ambiguity surrounding whether posoleucel will be indicated for treatment, prevention, or both. Regardless, AlloVir’s value proposition remains strong. While antiviral alternatives are expensive and not available for all viruses targeted by posoleucel, the cell therapy approach offers economic benefits. This is reinforced by increasing payer openness to reimbursing cell therapies, potentially alleviating the pricing overhang.
“Given clear economic support for posoleucel’s use, with increasing openness among payers to reimburse cell-therapies, we see a compelling business case even if approval is restricted to treatment-with little impact to our positive thesis,” analysts wrote.
And, AlloVir’s potential goes beyond its lead asset, Bank of America said, with label expansions being considered for posoleucel. While skepticism surrounds certain patient groups, infants and niche indications, such as CAR-T recipients, show promise. Additionally, ALVR106, the company’s early-stage candidate for respiratory viruses, is expected to offer utility beyond the transplant segment.
“Together with posoleucel’s expansion opportunities and an advancing pipeline, we see potential for sustained value creation, offering meaningful upside to shares, especially at current levels,” analysts noted.
Shares of AlloVir got a bump Friday, trading 13.6% higher at US$2.81 in the afternoon session.
Contact Angela at angela@proactiveinvestors.com
Follow her on Twitter @AHarmantas
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