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Oxford Biomedica 'fully valued' as Jefferies ups target price
Oxford Biomedica's long-awaited OXB-102 deal did not disappoint Jefferies, but analysts felt the share price was up with events.
The broker hiked its target price on the biopharmaceutical company from 825p to 1,100p, but noted that with an "insufficient near-term upside" left, it was time to lower the stock to 'hold' from its former 'buy' rating.
Despite the downgrade, Jefferies said it remained confident that Oxford Biomedica's Parkinson's treatment was on a path to sustainable profitability and envisages an "escalating interest" in its proprietary Lenti platform, the long-awaited Phase I/II trial set to start by the end of the year.
Jefferies felt Oxford Biomedica's Axovant deal, which saw OXB-102 licensed to Axovant for $30m upfront, up to $812.5m in future milestones and 7%-10% royalties on sales, was "critical" to the firm as the terms "amply surpass" its prior $200m and 8%-11% assumptions.
Jefferies said, "The recent deal with Axovant for AXO-Lenti-PD increases confidence OXB can successfully establish externally funded vehicles or secure out-licensing deals for the continued clinical development of its two remaining priority pipeline programmes, which we believe should raise awareness of these largely overlooked assets."
"However, after the recent share price rally, we believe the stock is fully valued, hence our downgrade to 'hold'", the broker added.
The broker also noted that, importantly, its model suggested that Oxford Bio now had sufficient cash to fund expansion, repay its debt facility by 2020, and deliver sustainable profitability moving forward.