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Bank of America Sees Over 350% Upside in Foamix (FOMX) Stock

Foamix (FOMX) hasn't had a great year, with shares falling 33% since the start of 2019. But things aren’t as bad as they may seem, argues Bank of America analyst Jason Gerberry.

The analyst reiterated a Buy rating on the stock, citing an attractive valuation and pipeline optionality. Gerberry also went out on a limb and maintained an ultra-bullish price target of $11. For perspective, Foamix's stock closed at $2.39 yesterday, so this implies upside of more than 350%.

Yesterday, the company outlined its ambitious strategy in its earnings conference call. Gerberry has compiled the following takeaways from the call:

  1. NDA review - FOMX is through mid-cycle review with the FDA and remains confident for the anticipated approval of '101 in October.
  2. Launch preparation - sales force alignment is underway (hiring offer to be made contingent on FDA approval). FOMX remains on track for early January launch of FMX-101, and plans to have 51 sales rep ready at launch.
  3. Pricing - launch price has not been finalized for FMX101, but mgmt. reiterated expectation that reimbursement access with limited restriction (tier 2 to tier 3) is feasible for FMX-101 with a net-to plan pricing range of $200-$400m.
  4. FCD105 (acne) - FMX plans to initiate a Phase 2 trial of FCD105, a topical foam formulation that combines 3% minocycline (anti-bacterial) and 0.3% of adapalene (anti-inflammatory), for the treatment of acne in 3Q19. The trial will be a randomized US study of ~400 patients, with topline results expected mid-2020.

Overall, this acne drug maker stands as a 'Strong Buy' name among Wall Street analysts. In the last three months, FOMX has won three bullish recommendations. With a return potential of close to 360%, the stock's consensus price target lands at $11.00.

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