Noble Capital Markets starts coverage on Onconova Therapeutics with Outperform rating, $12 price target

Noble Capital Markets has initiated coverage on Onconova Therapeutics Inc (NASDAQ:ONTX) with an Outperform rating and a $12 price target, offering significant upside potential to the current share price.

In a note to clients, Noble analyst Ahu Demir pointed out that Onconova Therapeutics is currently focused on completing a Phase 3 study (INSPIRE) with rigosertib, a RAS pathway inhibitor, for the treatment of 2nd line high-risk myelodysplastic syndrome (HR-MDS).

MDS is a blood disorder caused by malfunctioning of the bone marrow, which fails to make enough normal blood cells.

In March 2019, the company achieved 75% completion of patient enrollment, with full enrolment expected in the second half of 2019, and a data readout to follow in 2020.

The analysts noted that Onconova’s Phase 3 clinical trial (ONTIME) showed lackluster survival benefit in HR-MDS patients based on data readout in 2014.

However, post-hoc analysis of the data suggested a significant overall survival benefit in subgroups of patients, he added, with the INSPIRE trial was designed based on these findings, enrolling very high-risk MDS patients under 82 years of age who are primary HMA failures.

Demir said: “Based on data seen up to date, we believe rigosertib will show a clinical benefit in these patients.”

He added: “We believe that 1) ON 123300, a cyclin-dependent kinase (CDK) 4/6 inhibitor in solid tumors, and 2) rigosertib for the treatment of pediatric rasopathies carry strong upside potential for Onconova.”

The analyst said he values Onconova’s shares using a DCF (discounted cashflow) model based on a discount rate of 15%, and it assumes that rigosertib will be launched for the treatment of HR-MDS in 2021.

He calculates a terminal value of $745million for Oncova, and an implied risk-adjusted equity value of $119million.

In NASDAQ trading on Thursday, Onconova shares were 9% higher at $2.51 each.

Story by ProactiveInvestors