Raising Price Target Axcella Therapeutics held an R&D Day to review the company’s current Phase 2 trials and development platform. It also announced plans for a Phase 2 clinical trial to test AXA1125 in Long COVID (Post-Acute Sequelae of COVID-19). In view of this new trial and its market potential, we are raising our price target to $10 per share.Research and Development Day Reviewed Trials and Product Design The company reviewed how its products target multiple disease drivers rather than a single target in a disease pathway. Preclinical studies showed increases in fatty acid oxidation, restoration of cellular homeostasis, and reduced inflammation. These actions improve mitochondrial function and increase energetic efficiency, resulting in a reduction of symptoms.Ongoing Clinical Trials The company reviewed the data and design of its Phase 2 EMMPOWER trial in overt hepatic encephalopathy and its Phase 2 EMMPACT trial testing AXA1125 in NASH. These trials both began in 2021, with interim data expected from EMMPACT in 2022 and top-line data in 2H23.New Clinical Trial The company announced a new Phase 2a trial AXA1125 in patients with exertional fatigue related to Long COVID. It is designed as a randomized, double-blind trial that will enroll about 40 patients into groups receiving either treatment AXA1125 or matched placebo for 28 days. The trial is expected to begin by year-end and could announce data as early as mid 2022.Conclusion: The R&D Day presentations gave detailed explanations of the product designs, the previous clinical data, and the design of the current trials. The trial testing AXA1125 in Long COVID trial could open a market of 45 million COVID-infected patients in the US alone and 240 million worldwide. We have included a preliminary estimate for this indication and raised our price target to $10 per share. Read More >>