To The Moon

Avid stock market watchers will know the biotech space operates according to a different rule set. One session can wipe off a huge chunk of a stock’s valuation, if clinical testing goes awry or the regulators pick holes in a drug’s development. Yet, the opposite also holds true; shares can deliver unseemly gains if the news flow is decidedly positive.

Fortunately for Veru$Veru Inc.(VERU)$ investors, this week saw plenty of the latter. Shares soared by 182% in one session, after the company announced positive data from a phase 3 clinical trial of its Covid-19 treatment, sabizabulin.

In fact, the data was so good, that the company announced it was halting the late-stage testing. An interim analysis of hospitalized patients with moderate to severe COVID-19, who were at significant danger for adult respiratory distress syndrome (ARDS) and death and were given the drug, resulted in a 55% reduction in deaths compared to the placebo. Adding an extra layer of sheen, none of the 210 patients in the study reported any relevant safety issues with the drug being well-tolerated by all.

Over the next few weeks, the company will meet with the FDA and intends to file a request for an EUA shortly.

Given the promising results, Oppenheimer analyst Leland Gershell sees a substantial near-term revenue opportunity.

“Its demonstrated ability to improve outcomes in those at high risk of acute respiratory distress syndrome (ARDS) and death distinguishes sabizabulin from MRK's Lagevrio and PFE's Paxlovid, indicated for milder disease and for which respective US government procurement contracts worth $2.2B and $5.3B have been awarded,” Gershell commented. “With the global pandemic showing little sign of abating and BARDA to be allocated $9.25B in additional COVID-19 funding, we believe sabizabulin will serve critical roles in the US and abroad.”

To this end, Gershell reiterated an Outperform (i.e. Buy) rating on VERU shares, while boosting the price target from $25 to $36. Think you’ve missed the boat on this one? Think again. Gershell’s target makes room for gains of ~200%.

None of Gershell’s colleagues disagree; all 3 other ratings are positive too, providing the stock with a Strong Buy consensus view. Other analysts also think the shares have a way to go yet; going by the $30.5 average target, they will add 205% of muscle over the one-year period.