We initiate coverage for ImmuPharma plc (LON:IMM)
* Blockbuster potential: We expect Lupuzor could achieve multi-billion dollar annual sales as a potential treatment for Lupus. The drug has also recently shown promise in several other major chronic inflammatory indications.
* Unmet medical need: Lupus is a chronic inflammatory disease which is thought to affect some 5 million individuals worldwide. Existing treatments offer marginal efficacy while leading to significant side-effects.
* Strong regulatory position: Lupuzor has received Fast-Track and Special Protocol Assessment designations from the US Food and Drug Administration.
* Valuation: Our DCF model indicates a fair value of 171p/share, at which we set our Target Price
NORTHLAND CAPITAL PARTNERS VIEW: ImmuPharma plc is grossly undervalued. The company’s flagship drug, Lupuzor—a potential treatment for Lupus—is currently completing a Phase 3 clinical trial which is expected to read-out top line results before the end of 2017. The drug has been looked upon favourably by US regulators, which have deemed it a priority treatment. Should the drug be approved, we estimate it could achieve multi-billion dollar annual sales. We initiate coverage indicating substantial upside to the current share price.