RedHill Bio Price Target Boosted To $32, Buy Reiterated

In a report published Wednesday, HC Wainwright analyst Swayampakula Ramakanth reiterated a Buy rating on RedHill Biopharma Ltd - ADR (NASDAQ: RDHL), while raising the price target from $23 to $32. The company announced on Tuesday that it had received UK regulatory approval to initiate the Phase 3 study of RHB-104 in Europe (MAP EU).

"We expect this study to be similarly structured as the ongoing Phase 3 MAP US study, with 360 Crohn's disease patients to be treated with either RHB-104 or placebo for 52 weeks, and the primary outcome measure to be the remission rate at 26 weeks. We anticipate the MAP EU study to initiate in 4Q15 and could potentially complete by the end of 2018," Ramakanth said.

Since approvals and launch take more time in Europe than in the U.S., the analyst expects RB-104 to be launched in the major European countries by early 2021 for the treatment of Crohn's disease. There is a large unmet need for this disease, with no new treatments being approved in the recent past.

According to the HC Wainwright report, "With an incidence rate of nearly 530,000 patients in the US alone, the success of RHB-104 as a therapy in both US and EU could contribute approximately 60 percent of RedHill's revenues by 2025."

Given the expectations of RHB-104's European royalties, the analyst now expects RedHill's revenues to rise from $1.8 million in 2016 to almost $231 million in 2025, as compared to the previous estimate of $172 million in 2025. The EPS is accordingly expected to grow to $0.74 by 2025, as compared to the prior estimate of $0.53.