Morphic Holding Inc. (MORF, Financial) is one of five fledgling biotechnology companies cited for their potential to develop a drug that generates more than $1 billion in sales, according to an article published by Kiplinger in July. The Boston-based company was started in 2014 and went public in June with an offering that raised more than $100 million at a share price of $15.
The stock has traded as high as slightly over $33 since its public debut, but has since eased to about $14.50, just a few dollars over its low for the year. Despite the dip, the few professional investors following the company seem confident that Morphic has a blockbuster drug in its future. A CNN Money story said the three analysts offering 12-month price forecasts for the company set a median target of $30, with a high estimate of $31 and a low estimate of $28. The company is rated a buy.
Morphic’s research program is aimed at something called integrin receptors, the inhibition of which could play an important role in treating fibrotic diseases and inflammatory bowel disease, according to the company. Fibrosis is a common feature of many chronic diseases involving tissue injury and can lead to the progressive failure of multiple organs, such as the lungs, liver, skin and kidney. Inflammatory bowel disease is a group of chronic autoimmune and inflammatory conditions of the gastrointestinal tract that include ulcerative colitis and Crohn's disease, among others.
The company’s drug candidates have yet to be tested on humans. It plans to ask the Food and Drug Administration to approve the beginning of clinical trials of two treatments next year.
Morphic has a good pedigree. The company’s work is based on science from one of the top immunologists in the world, Tim Springe of Harvard. He co-founded the company along with investment firm Polaris Partners. Springer is the company's largest investor with more than 20% of Morphic’s shares. Other top shareholders are Omega Funds, Polaris, Pfizer (PFE, Financial) and a GlaxoSmithKline (GSK, Financial) subsidiary.
The company’s relationship with other big names in the pharmaceutical industry should inspire further optimism about its prospects. Morphic has licensing agreements AbbVie (ABBV, Financial) and the Jansen unit of Johnson & Johnson (JNJ, Financial).
The company is headed by industry veteran Praveen Tipirneni, who previously served as senior vice president of corporate development and global strategy for privately held Cubist Pharmaceuticals.
Disclosure: The author holds a position in Johnson & Johnson.Â
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