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TICKERS: KNSA

Co. Still Compelling After Drug Trial Failure
Research Report

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The Quick Take

  • Wedbush has an Outperform rating and a $25.91 per share target price on Kiniksa Pharmaceuticals.
  • Wedbush ranks Kiniksa Outperform despite news that the recent study of mavrilimumab in COVID-19-related acute respiratory distress syndrome (ARDS) failed to meet its primary efficacy endpoint, reported analyst David Nierengarten in a Dec. 28 research note.
  • Wedbush removed ARDS from its model, which only contributed $1 to the target price.
  • Kiniksa's commercial-stage Arcalyst drug holds the most potential value for the biopharma, according to Wedbush.
  • Positive early reports of Arcalyst sales suggest Kiniksa's shares are greatly undervalued.
  • Because Wedbush estimates Arcalyst's value at $21 per share, and Kiniksa's stock is currently trading far below that, investors now are essentially getting the pipeline for free.

The primary endpoint missed in the Phase 3 part of the Phase 2/3 trial evaluating Kiniksa Pharmaceuticals Ltd.'s (KNSA:NASDAQ) drug candidate mavrilimumab in COVID-19-related acute respiratory syndrome (ARDS) was proportion of patients alive and off of mechanical ventilation at day 29, noted Wedbush analyst David Nierengarten.

Mavrilimumab is an anti-GM-CSF-Rα monoclonal antibody.

All is not lost, however, the analyst pointed out, given the strength of Kiniksa's Arcalyst program, the biopharma's primary value driver. Arcalyst is on the market for three indications, and sales so far suggest rapid uptake of the medication.

"We continue to hold a favorable view of Kiniksa and look forward to updates from its pipeline," Nierengarten wrote.

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Disclosures:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures for Wedbush, Kiniksa Pharmaceuticals, Dec. 28, 2021

Wedbush Securities does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Please see pages 3–5 of this report for analyst certification and important disclosure information.
Analyst Certification: We, David Nierengarten and Dennis Pak, 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 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: 1. WS makes a market in the securities of Kiniksa Pharmaceuticals. 2. WS co-managed a public offering of securities for Kiniksa Pharmaceuticals within the last 12 months. 3. WS provided Kiniksa Pharmaceuticals with investment banking services within the last 12 months.
This report is intended for [email protected] Unauthorized distribution is prohibited.
Wedbush disclosure price charts are updated within the first fifteen days of each new calendar quarter per FINRA regulations. Price charts for companies initiated upon in the current quarter, and rating and target price changes occurring in the current quarter, will not be displayed until the following quarter. Additional information on recommended securities is available on request. Disclosure information regarding historical ratings and price targets is available.
Research Disclosures: *WS changed its rating system from (Strong Buy/ Buy/ Hold/ Sell) to (Outperform/ Neutral/ Underperform) on July 14, 2009. Applicable disclosure information is also available upon request by contacting the Research Department at (212) 833-1375, by email to [email protected] You may also submit a written request to the following: Wedbush Securities, Attn: Research Department, 142 W 57th Street, New York, NY 10019.
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Wedbush Securities does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Please see pages 3–7 of this report for analyst certification and important disclosure information.




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