We are maintaining our Neutral recommendation on Ardea Biosciences Inc. (RDEA) with a target price of $24.00.
Ardea Biosciences, headquartered in San Diego, California, focuses on the discovery and development of small-molecule therapeutics for the treatment of gout, human immunodeficiency virus (HIV) and cancer.
Ardea recently reported first quarter 2011 results. The development stage biopharmaceutical company’s net loss of $0.59 per share exceeded the year-ago loss by $0.05 and the Zacks Consensus loss Estimate by $0.09. The wider loss was attributable to lower revenues and higher operating costs recorded in the quarter. (Read our full coverage on this earnings report: 1Q Loss Widens at Ardea )
We are pleased with Ardea’s efforts to develop its lead candidate lesinurad (formerly RDEA594), for the treatment of hyperuricemia (elevated uric acid levels) and gout. The incidence and severity of gout is increasing in the United States.
Lesinurad will target a market with a huge unmet need on approval. This should boost the company’s top line significantly. Furthermore, the lucrative agreement with Bayer (BAYRY), signed in 2009, focusing on the development of MEK (methyl ethyl ketone) inhibitors for the treatment of cancer is another positive for Ardea.
However, we remain concerned about the early stage development status of the pipeline. Furthermore, any pipeline development has its won risks. Moreover, the competition awaiting Ardea’s candidates on approval is another concern. We see limited upside from current levels and maintain our long-term Neutral stance on Ardea.
BAYER A G -ADR (BAYRY): Free Stock Analysis Report
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