HC Wainwright Says Aerpio Pharma Flies Under The Radar Due To OTC Listing, Projects 150% Upside

Aerpio Pharmaceuticals Inc (OTC: ARPO), an OTC-listed company specializing in drug development for ocular diseases, earned a bullish review Wednesday.

The interest in the stock can only go higher, as the company seeks to up-list the shares on the Nasdaq in the coming months, according to H.C. Wainwright. 

The Analyst

Analyst Raghuram Selvaraju initiated coverage of Aerpio with a Buy rating and $10 price target, suggesting upside potential of 157 percent.

The Thesis

Aerpio's lead product candidate AKB-9778 is in a Phase 2b trial for non-proliferative diabetic retinopathy, or NPDR, Selvaraju said in a Wednesday note.

AKB-9778 activates the Tie2 receptor responsible for vascular stability, thereby slowing or reversing damage blood vessel damage caused by diabetes, the analyst said.

What differentiates AKB-9778 from approved treatments such as Roche Holdings AG Basel ADR Common Stock (OTC: RHHBY)'s Genentech unit's Lucentis is the candidate's potential to be self-administered by patients through subcutaneous injection, the analyst said. Lucentis requires monthly intraocular injection.

"We believe that AKB-9778 could be readily adopted by early-stage as well as late-stage DR patients, and does not necessarily need to beat Lucentis or Eylea (aflibercept) in terms of response rate in diabetic retinopathy severity score improvement to be commercially successful." 

The analyst estimates peak sales of about $2.3 billion for AKB-9778 in 2029 if 10 percent of NPDR pateints in the U.S. were targeted. 

Top-line results from the Phase 2b study are due in the second quarter of 2019, Selvaraju said. 

Aerpio has a second pipeline candidate, AKB-4924, in a Phase 1b trial to treat the underlying cause of inflammatory bowel disease, according to H.C. Wainwright. A Phase 1b trial in ulcerative colitis could begin in the second half of this year, the firm said. 

The Price Action 

Aerpio has shed about 18 percent year-to-date.

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