Soligenix (OTCBB:SNGX) shares are currently undervalued, according to Zacks Investment Research analyst Grant Zeng, who made the assertion in a research note published Friday on financial markets blog Seeking Alpha.
The company, which just earlier today said it has enrolled and treated all the patients in its phase 1 study for SGX203 - one of its main product candidates and a potential treatment for pediatric Crohn's disease, holds three platform technologies. Aside from SGX203, the oral BDP - beclomethasone 17,21-dipropionate - treatment, the company also holds the SGX94 platform and the ThermoVax technology in its biodefense unit, which gives Soligenix a diversified pipeline, writes the analyst.
SGX94 is a treatment for oral mucositis, for which the company plans to start a phase 2 clinical study in the second half of this year. Earlier this month, the company received fast track designation from U.S. regulatory authorities for the treatment in head and neck cancer patients undergoing radiation and/or chemotherapy. Zeng says the market opportunity for this drug is "huge" as mucositis is a debilitating condition that frequently affects cancer patients undergoing radiation and chemotherapy treatment.
According to the Zacks report, there is an estimated 500,000 cancer patients getting mucositis annually in the United States alone. Worldwide, the potential market for mucositis will exceed $1 billion in the next few years. In addition to oral mucositis, SGX942 has the potential for multiple other indications, the analyst noted, such as infectious disease and biodefense.
Zeng highlights the potential for each of Soligenix's platforms and products, including the Thermovax vaccine thermostabilization technology. According to the company, for vaccines that are intended for long-term stockpiling, such as for use in biodefense or in pandemic situations, the use of ThermoVax, which has been tested in combination with the company's RiVax and VeloThrax vaccines, can lead to easier storage and the distribution of strategic national stockpile vaccines in emergency situations.
"Based on our analysis, we think Soligenix shares are undervalued at this time. Currently, shares of Soligenix are trading at around $1.05 per share, which values the company at $18 million in market cap," wrote Zeng in the note.
"We admit that it's always difficult to value a development stage biotech company. Soligenix is no exception. However, we do think that current market value of Soligenix is a deep discount compared to its peers in the same industry."
The analyst estimates that most small biotech companies of development stage are valued between $50 million to $500 million, depending on how advanced the pipeline is and which indications the company is targeting.
"Soligenix has multiple catalysts in the next 12 month or so," he concluded, giving the company a price target of $4.50 per share, which values Soligenix at a market cap of $81 million - a level Zeng dubs as "very conservative".
Shares of the company were trading at $1.05 on Friday afternoon, down by one penny. So far this year, the stock has gained 75 per cent.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.