Diamond Equity Research LLC
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Diamond Equity Research Initiates Coverage on Hoth Therapeutics, Inc. (NASDAQ: HOTH)
Monday, September 16, 2019 9:30 AM
NEW YORK, NY / ACCESSWIRE / September 16, 2019 / Diamond Equity Research, a leading equity research and corporate access firm with a focus on small capitalization public companies has initiated coverage of Hoth Therapeutics, Inc. (NASDAQ:HOTH). The in-depth 24-page initiation report includes detailed information on Hoth's business model, services, industry, valuation, management, and risks.
The full research report is available here. Highlights from the report include:
Large Market Opportunity
Awareness of skin disorders has grown exponentially in recent decades, driving demand for more effective treatments. Eczema is one of the most prevalent skin diseases, with atopic dermatitis (AD) being the most common type affecting a significant portion of the global population. The National Eczema Association estimates conservatively that 31.6 million individuals in the U.S. suffer from eczema, incurring an annual economic burden of around $5.3 billion. The study anticipates that the AD drug sales in the U.S. will grow to $13.6 billion by 2027, which indicates a significant potential market for effective AD treatments.
HOTH’s lead product, BioLexa offers a novel potential therapy to treat AD (eczema). It expects to commence a phase 2 trial with enrollment starting in Australia in the end of 2019, with the company targeting a data readout in 1H 2020. The company expects to file the new drug application from mid- to late 2021, which means HOTH could potentially launch its lead product in the U.S. market in 2023.
Although HOTH’s investment and timeline in getting its drugs to market are relatively small compared to traditional drug development, HOTH’s pipeline is still earlier stage. We believe HOTH is well positioned to provide investors a unique, high risk high reward small-cap specialty pharma investment opportunity, with its multiple differentiated potential treatments under development.
Unique Atopic Dermatitis Treatment Approach
HOTH is an early-clinical-stage biopharmaceutical company developing its lead product BioLexa, a unique potential targeted treatment for mild to moderate atopic dermatitis (AD; also known as eczema). BioLexa is one of the first drug candidates to prevent symptoms triggering eczema rather than simply treating symptoms after they occur. It is differentiated as it combines an FDA-approved zinc chelator with one or more approved antibiotics in a topical dosage form to address unchecked eczema flare-ups by preventing the formation of infectious biofilms; in simpler terms, it targets the bacteria as opposed to other eczema treatments addressing the immune-related and inflammatory factors. Hoth uses approved drugs that would enable it to take the faster 505 (b) (2) route for regulatory approval of BioLexa, if the upcoming clinical studies indicate positive results.The company also working with the George Washington University to counter the dermatological-related side effects of Erlotinib therapy in cancer patients, and is developing VNLG 152 with strong preclinical data in the fields of cancer and dermatology. HOTH has established relationships with renowned doctors and scientists and top medical institutions. It recently signed an exclusive licensing agreement with the University of Cincinnati to obtain a patented new food allergy genetic marker; started a pilot study on diabetic skin disorders with the Massachusetts General Hospital’s Vaccine and Immunology Center; expanded its working relationship and signed an exclusive licensing agreement with George Washington University; and entered into a commercial licensing agreement with the University of Maryland (Baltimore) and Isoprene Pharmaceuticals Inc. We anticipate further licensing agreements and collaborations going forward.
The global dermatitis drugs market continues to expand, driven by the advancements in numerous drug classes. The AD therapeutics market currently uses conventional forms of therapy such as topical corticosteroids, calcineurin inhibitors, and PDE4 inhibitors to treat patients with mild to moderate AD symptoms.HOTH expects to face significant competition from other current treatments and the development pipelines of large pharmaceutical companies and emerging biotechnology companies. That said, we believe HOTH is well positioned in the industry, with its (1) novel and differentiated potential treatment targeted at preventing the formation of bacterial biofilm and addressing the potential impairment of skin barrier function, (2) patented BioLexa Platform, which combines two existing approved drugs, enabling reliance on existing safety data for those drugs, which could result in faster regulatory approval, (3) strong intellectual property portfolio, including exclusive licenses to patents and trademarks, and (4) additional potential therapies targeting dermatological issues and genetic disorders, including diabetic ulcers, skin aesthetics, psoriasis, and food allergies.
It is very difficult to value Hoth Therapeutics, Inc. given its early stage and the limited number of similar publicly traded dermatology companies. In our comparable company analysis, we screened for small-capitalization companies in the biopharmaceutical industry focused on developing therapeutics for eczema. We used a blend of these companies to arrive at a mean technology value. We also built a discounted cash flow to value HOTH. From our blended valuation models, we found the shares to be undervalued with significant upside from current trading levels. Based on an average of the two methods, we computed a blended valuation of $8 per share, indicating the stock is undervalued relative to current prices.
About Hoth Therapeutics, Inc.
Hoth Therapeutics, Inc. is a clinical stage biopharmaceutical company focused on unique therapeutics for patients suffering from indications such as atopic dermatitis, also known as eczema, as well as dermatological and chronic wound disorders, psoriasis and acne. The company was incorporated in 2017 and is headquartered in New York, New York.
For more information, visit https://ir.hoththerapeutics.com/.
About Diamond Equity Research
Diamond Equity Research is a leading equity research and corporate access firm focused on small capitalization companies. Diamond Equity Research is an approved sell-side provider on premiere institutional investor platforms including Factset, Morningstar, and Thomson One. The firm is headquartered in midtown Manhattan.
For more information, visit www.diamondequityresearch.com.
Full disclosures pertaining to this report can be found at the end of the report and on the Diamond Equity Research website disclosure section. Hoth Therapeutics, Inc. has paid for this report as company sponsored research, which is meant to subsidize the high cost of creating the report and monitoring the security, however the views in the report reflect that of Diamond Equity Research. Diamond Equity Research LLC is being compensated by Hoth Therapeutics, Inc. for producing research material consisting of an initiation research report and update notes regarding Hoth Therapeutics, Inc. and its securities over a one year period. All payments are received upfront. As of 09/10/2019 the issuer had paid us $22,000 for our research services, which commenced 08/09/2019. The issuer has paid us for non-research related services consisting of $1,500 to present at an investment conference as of 09/10/2019 and $550 for a press release reimbursement. Additional fees may have accrued since then.
Diamond Equity Research
SOURCE: Diamond Equity Research LLC