Stocks are having a rough 2022, you say? Just have a chat with Veru (VERU) investors. Shares are up 125% on a year-to-date basis with almost half of the gains accrued over the past week.
The uptick is on account of the company’s Covid-19 treatment, sabizabulin, which the FDA has said can now be advanced for a request for Emergency Use Authorization (EUA).
Recall, in April Veru announced positive data from a phase 3 clinical trial for the treatment and given the readout was so strong, even halted the late-stage testing. The request for the EUA application is anticipated to be submitted before the end of the second quarter.
Oppenheimer’s Leland Gershell says the news supports his outlook and expects the EUA for the treatment of hospitalized COVID-19 patients will be granted “by early fall.”
The company is currently scaling up manufacturing so that by September it will to be able to cater to around 250,000 patients a month while there are also ongoing talks with BARDA and OUS (outside US) government agencies around “potential purchases.”
“In turn,” the analyst went on to say, “we would expect VERU to begin realizing transformative levels of revenue from government-funded purchases.”
What sort of levels are we talking about? Going by the “lowest average weekly US hospitalization rate YTD,” treating only 10% of those admitted for COVID-19 at a price similar to a 10-day remdesivir course (~$4,700), would generate annual sales of roughly $250 million.
“However,” notes Gershell, “VERU has indicated much more robust pricing of $36K for the average course (10–12 days) of sabiz, which by our math would imply ~$1.8B/year.”
Despite the stock’s recent big moves, Gershell thinks the shares are still way undervalued; the analyst’s price target stands at $36, which suggests they will still climb 177% higher in the year ahead. Gershell’s rating stays an Outperform (i.e. Buy). (To watch Gershell’s track record, click here)
It’s clear that Wall Street generally agrees with Gershell, as the Strong Buy consensus rating on VERU is unanimous and based on Buys only – 5, in total. The shares are selling for $13.18, and their $33 average price target suggests room for ~148% upside in 2022. (See VERU stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
