Why ASLAN Pharmaceuticals Blasted Higher on Friday | The Motley Fool

What happened

Shareholders of ASLAN Pharmaceuticals (NASDAQ:ASLN) are primed for a good weekend. On Friday, thanks to a bullish research note, shares of the Singapore-based biotech surged as much as 20% higher before settling down to a 7% gain on the day.

So what

That morning, analyst Maury Raycroft initiated coverage of ASLAN’s stock, with a buy recommendation and a price target that immediately drew notice from investors. Raycroft believes the shares are worth $8 apiece, more than 150% higher than Thursday’s closing price.

Image source: Getty Images.

ASLAN, a clinical-stage immunology biotech, only has two treatments in development. The one further along the pipeline is ASLAN004, which targets both atopic dermatitis (eczema) and asthma.

The company has put ASLAN004 through its paces in phase 1 testing, and in the third quarter it anticipates presenting top-line data from a multiple ascending dose (MAD) study within the trial. A phase 2b trial should begin in the second half of this year.

Raycroft is a believer in ASLAN004’s future. In initiating coverage of its developer, the analyst characterized the drug as a “fast follower” in atopic dermatitis. He feels that it can slipstream behind Regeneron‘s popular immunology drug Dupixent, which can be considered a trailblazer in the treatment of the affliction.

Now what

A price target set far higher than a stock’s existing level is certainly cause for notice. As per Raycroft’s analysis, ASLAN’s shares certainly look cheap these days. But of course, it’s still rather early in the developmental life of ASLAN004, and the company has much to prove with the drug.


This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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