We are upgrading Ardea Biosciences Inc (RDEA) to Outperform from Neutral due to the promise shown by its lead pipeline candidate lesinurad, which is being developed for treating hyperuricemia and gout. Lesinurad, which has performed well in clinical studies, will target a market with huge unmet need on approval.
The current therapies have limited efficacy with many gout patients failing to respond favorably to these therapies. This should provide lesinurad with the opportunity to take away share from currently approved therapies.
The impressive balance sheet at Ardea, which has been strengthened by the signing of the lucrative agreement with Bayer, is another positive for the company. We believe that the current price represents an attractive entry point for long-term investors.
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