Wedbush analysts Dr. Robert Driscoll, Dr. Ritika Das, and Sam Ravina, in a research report published on October 28, 2024, maintained their Outperform rating on Monte Rosa Therapeutics Inc. (GLUE:NASDAQ) while raising their price target to US$15.00 from US$11.00. The report follows Monte Rosa's announcement of a collaborative agreement with Novartis for the development of MRT-6160, its VAV1-degrader program.
The analysts highlighted the significant financial terms of the agreement, stating, "GLUE will receive an upfront payment of US$150M as well as total milestone payments of up to US$2.1B that will include US$1.5B in potential development and regulatory milestones that begin upon Ph 2 studies."
Regarding the partnership structure, the analysts noted, "Upon start of Ph 3 studies, 30% US P&L would be shared with Ph 3 development co-fund and ex-US tiered royalties. Importantly, NVS will cover the complete costs of Ph 2 studies and will obtain worldwide rights to develop, commercialize and manufacture MRT-6160 as well as other VAV MGDs."
The analysts viewed this collaboration positively, stating, "We view this favorable collaboration agreement as an additional robust validation of GLUE's QuEEN MGD platform (noting Novartis' significant efforts in the degrader space), as well as an acknowledgment of the significant potential opportunities around targeting VAV1 with a first in class degrader."
They also emphasized the strategic benefits, noting, "Furthermore, we note the likely accelerated timelines for the MRT-6160 development program overall, and significant extension of GLUE's operational cash runway, which we expect to allow advancement of its deep pipeline."
The report highlighted the ongoing Phase 1 SAD/MAD healthy subject study for MRT-6160 in autoimmune diseases, with initial data expected in 1Q:25.
Wedbush's valuation methodology is based on sales multiples. The analysts explained, "Our PT is derived from applying a 6x multiple to estimated US sales and a 15x multiple to EU royalties of MRT-2359 in 2031, discounted by 30% annually."
The analysts also outlined several risk factors, including potential clinical and regulatory failure of MRT-2359, challenges in achieving sales estimates, and possible commercial competition from current and future therapies.
In conclusion, Wedbush's increased price target to US$15 reflects growing confidence in Monte Rosa Therapeutics following the Novartis collaboration agreement. The share price at the time of the report of US$8.05 represents a potential return of approximately 86% to the analysts' target price, highlighting the significant upside potential as the company advances its development programs with its new partner.
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Disclosures for Wedbush, Monte Rosa Therapeutics Inc., October 28, 2024
Analyst Certification We, Robert Driscoll, Ritika Das and Sam Ravina, certify that the views expressed in this report accurately reflect our personal opinions and that we have not and will not, directly or indirectly, receive compensation or other payments in connection with our specific recommendations or views contained in this report.
The Distribution of Ratings is required by FINRA rules; however, WS' stock ratings of Outperform, Neutral, and Underperform most closely conform to Buy, Hold, and Sell, respectively. Please note, however, the definitions are not the same as WS' stock ratings are on a relative basis. The analysts responsible for preparing research reports do not receive compensation based on specific investment banking activity. The analysts receive compensation that is based upon various factors including WS' total revenues, a portion of which are generated by WS' investment banking activities. Company Specific Disclosures This information is subject to change at any time. 2. WS managed a public offering of securities for Monte Rosa Therapeutics within the last 12 months. 4. WS has received compensation for investment banking services from Monte Rosa Therapeutics within the last 12 months. 5. WS provided Monte Rosa Therapeutics with investment banking services within the last 12 months.
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