On Friday, Jefferies initiated coverage on Inhibikase Therapeutics Inc (NASDAQ:IKT) shares with a Buy rating and set a price target of $8.00. The firm views the biopharmaceutical company as undervalued at a $175 million market capitalization, citing the potential of its lead drug candidate, IkT-001Pro.
IkT-001Pro, an oral pro-drug of imatinib, is slated to enter Phase IIB clinical trials for pulmonary arterial hypertension (PAH). The analyst noted that imatinib had shown promising results in Phase II/III trials for PAH a decade ago but was not further developed due to safety concerns. However, Inhibikase Therapeutics' formulation is expected to mitigate toxicity issues.
The coverage initiation also highlighted the company's financial position, stating that the recent over $100 million Private Investment in Public Equity (PIPE) has alleviated balance sheet concerns. This funding is anticipated to be sufficient for the company to reach key Phase IIB efficacy data, expected in late 2026 or early 2027.
In addition, the analyst pointed out that Inhibikase Therapeutics offers a "free Parkinson's call option" with its second oral drug candidate, risvodetinib. This aspect of the company's portfolio provides an additional avenue for potential growth and value realization.
Inhibikase Therapeutics focuses on developing treatments for serious and life-threatening diseases. With the company's latest financial moves and upcoming clinical trials, it is positioned to advance its drug development programs over the next few years.
In other recent news, Inhibikase Therapeutics has experienced significant financial and developmental shifts. The company announced a private placement financing valued at approximately $110 million, led by Soleus Capital and other investors. This funding is intended to support the initiation of a Phase 2b trial in pulmonary arterial hypertension (PAH) and general corporate functions.
The company is offering shares of common stock and pre-funded warrants, and the transaction is subject to standard conditions. In conjunction with the financing, four new directors are set to join the board.
On the earnings front, Inhibikase reported a net loss of $5.0 million for the second quarter. Despite this, the company managed to raise $4 million in May, extending its cash runway to December 2024. H.C. Wainwright adjusted its full-year 2024 earnings per share (EPS) forecast for Inhibikase to ($2.75), a decrease from the prior estimate.
Additionally, Inhibikase has completed enrollment for its Phase 2 trial of risvodetinib for Parkinson's disease. The company has also filed an Investigational New Drug (IND) application for a Pro drug formulation of imatinib mesylate for PAH, with clinical development set to begin later this year.
H.C. Wainwright has adjusted its outlook on Inhibikase Therapeutics, reducing the price target to $5.00 from the previous $15.00, while continuing to recommend the stock as a Buy. This adjustment follows the company's announcement of the private placement. These are the latest developments for the company.
InvestingPro Insights
Recent InvestingPro data provides additional context to Jefferies' bullish stance on Inhibikase Therapeutics Inc (NASDAQ:IKT). The company's market capitalization stands at $186.8 million, slightly higher than the $175 million cited in the analyst report, reflecting recent market movements. IKT has shown impressive price performance, with a 133.61% return over the last month and a 159.81% return over the past year, aligning with the analyst's view of the company's undervaluation.
However, investors should note that IKT is not currently profitable, with a negative P/E ratio of -10.16 for the last twelve months as of Q2 2024. This is not uncommon for early-stage biopharmaceutical companies focused on drug development. An InvestingPro Tip highlights that IKT "suffers from weak gross profit margins," which is evident in the reported gross profit margin of -15,050.99% for the same period.
On a positive note, another InvestingPro Tip indicates that "liquid assets exceed short term obligations," suggesting that the company's recent PIPE funding has indeed strengthened its financial position, as mentioned in the article. This improved liquidity could support IKT's ongoing clinical trials and development efforts.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for IKT, providing a deeper understanding of the company's financial health and market position.
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