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Q BioMed Inc: THE INVESTMENT CASE

Wall Street analyst kicks off Q BioMed coverage with ‘buy’ rating and punchy US$16 price target

Kumaraguru Raja sees “multiple catalysts” in the year ahead which could put a rocket under the share price
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INVESTMENT OVERVIEW: QBIO The Big Picture
Q BioMed shares have been hovering around the US$3 mark for most of February and March

The pace of progress at Q BioMed Inc (OTCMKTS:QBIO) is picking up.

Analysts at Brookline Capital Markets recently kicked off their coverage of the biotech accelerator firm with a ‘buy’ recommendation and punchy price target.

It is currently awaiting FDA approval for the manufacturing facility for its 'revenue ready' pain drug, from which, significantly, commercialisation and revenues will follow.

Kumaraguru Raja reckons the stock is worth US$16 – more than five times what shares are currently valued – claiming that there are “multiple catalysts” on the horizon.

Multiple catalysts in 2018

“We are initiating coverage with a ‘buy’ rating and US$16 target price,” he wrote in a research note published Friday.

“We like the focused approach of acquiring and in-licensing pre-clinical, clinical stage and approved therapeutic products and advancing them through value inflection points to create shareholder value.

“We expect stock price inflection in 2018 with commercial launch of generic Sr-89, and QBM-001 Phase 2/3 pivotal trial initiation for rare paediatric non-verbal autism spectrum disorder.”

Out of QBIO’s four drug candidates, Sr-89 – an injection which treats painful bone metastasis – is the most advanced and is ‘revenue ready’, with the Food and Drug Administration having already approved it.

Raja expects the commercial launch of the generic drug in the third quarter of this year, claiming there is a “huge clinical/ medical need for effective pain palliation”.

“Low price, effective pain management give it advantages over other therapies,” he adds.

A blockbuster nonverbal disorder drug?

One of Q BioMed’s other candidates is QBM-001 which treats a rare paediatric nonverbal disorder, which Raja estimates affects around 20,000 children with autism.

The analyst expects an IND in the second quarter of 2018, followed by a pivotal phase II/III trial initiation in rare paediatric nonverbal disorder at some point this summer.

“At a premium pricing of ~US$100,000 per patient per year, QBM-001 could potentially generate about US$1.5bn from US and a similar number from Europe and Rest of World per year.

“We assume peak penetration of 20% in U.S with a price of US$100,000 for peak sales of US$450M.”

Billion dollar opportunity for liver cancer candidate

Next up is Uttroside-B, an investigational treatment for liver cancer which is in pre-clinical development.

Around 42,000 new cases are diagnosed every year in the US alone, with around three-quarters of those people dying as a direct result of the disease.

Unsurprisingly then, Raja said the “promising” product has the potential to address a “huge potential market”, worth upwards of US$1bn. That said, he is reining in his enthusiasm for the time being while he waits on further data.

“It is too early to speculate on how it might perform in human safety and efficacy studies,” read his research note.

“We should see completion of preclinical studies and an IND filing in 2018, at which point, we will pick up the topic and follow the developments closely to make a determination.”

Glaucoma patients “hungry” for new treatments

QBIO’s final candidate is called MAN-01 – an eye drop for glaucoma sufferers, which is a market “hungry” for innovation and new effective products, according to Raja.

Pre-clinical studies are set to get underway this year, followed by clinical trials in 2019. Early data from mice studies has been “positive” though, notes the analyst.

Raja also explains that, because MAN-01 is primarily a vasculature maintaining molecule, it has the potential to be used for a variety of other diseases, including chronic kidney disease, age-related macular dystrophy, as well as cardiovascular diseases.

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