Daily Update - May 15, 2023
Selected stock price target highlights of the day
By Matthew Otto
Sarepta Therapeutics had a panel of experts’ recommendation for an accelerated approval of its gene therapy for Duchenne muscular dystrophy. ,The advisory panel voted 8 to 6 in favor of the approval. The decision now lies with FDA leaders, who have until May 29 to grant accelerated approval, although they are not obligated to follow the advisory panel’s recommendation.
Duchenne muscular dystrophy is a fatal disease that typically affects boys, causing a rapid decline in muscle strength and function. Sarepta’s gene therapy, SRP-9001, aims to halt this decline by delivering a shortened version of the dystrophin gene, which is crucial for muscle cell structure, into patients’ cells. The therapy showed promising results in lab tests, quickly leading patients to produce the modified protein intended to strengthen their muscles. However, its effectiveness in halting muscle decline in Duchenne patients is less clear, with only one unblinded study showing a statistically significant difference.
The therapy’s accelerated approval depends on whether it is reasonably likely to predict clinical benefit, a threshold that is lower than the FDA’s standard for full approval. One key factor in favor of the therapy is the minimal safety concerns it has raised so far. Moreover, Sarepta is currently conducting a larger study, the results of which are due by the end of 2023. If the study’s data does not support the therapy’s effectiveness, the FDA has the option to retract the product.
Pfizer is also testing a DMD gene therapy, indicating that there’s competition in the market for this type of treatment.
This treatment is particularly significant for Sarepta as it is believed to be the company’s best chance at turning a profit for the first time in its 40-year history. Despite having three muscular dystrophy drugs on the market which generated $930 million in revenue last year, the company reported an annual loss of $700 million.
Wall Street Action
- UBS analyst Colin Bristow rates the stock with a Buy and gives a $160 Price target. SIting that an approved gene therapy could lift Sarepta’s revenue close to $2.6 billion in 2024, with profits of $11.45 a share. The gene therapy is a one-time treatment for a rare disease, so sales of SRP-9001 would peak the next year, generating profits in 2025 of $16.81 a share, Bristow believes. Sarepta sales and profits will taper thereafter
- Bank of America Securities analyst Tazeen Ahmad has maintained a Buy rating and raised the price target from $164 to $176.
- Credit Suisse analyst Judah Frommer has maintained a Neutral stance but increased the price target from $138 to $151. Relatively one of the few analysts who is more skeptic on the prospects of the stock.
- Needham analyst Gil Blum has kept a Buy rating and raised the price target from $160 to $185.
- Evercore ISI analyst Gavin Clark-Gartner raised Sarepta’s price target to $173.
- Citi analyst Neena Bitritto-Garg raised the price target to $204.Tied on Street high with Mathew Harrison from Morgan Stanley.
BioAtla has reported its financial results for Q1 2023 and provided updates on its clinical programs. The company is focused on the development of Conditionally Active Biologic (CAB) antibody therapeutics for the treatment of solid tumors. Key updates and milestones include the following:
- Advancing CAB-AXL BA3011 in ongoing sarcoma Phase 2 studies, with the Leiomyosarcoma cohort readout expected in 2H23.
- FDA feedback and initiation of Phase 2, part 2 remain on track for 2H23.
- Enrolling BA3021 Phase 2 NSCLC study, with an anticipated interim readout on track for 2H23.
- Enrolling CAB-ROR2 BA3021 Phase 2 squamous cell carcinoma of the head & neck (SCCHN) study as anticipated.
- Phase 1 dose-escalation CAB-CTLA-4 (BA3071) study ongoing, with anticipated data readout and initiation of Phase 2 on track for 2H23.
- FPI anticipated for CAB-EpCAM x CAB-CD3 bispecific T-cell engager (TCE) (BA3182) Phase 1 study in 1H23.
- Cash balance of $192.7 million is expected to provide funding into 2025.
BioAtla reported a net loss of $27.5 million for Q1 2023 and used $22.7 million in net cash for operating activities during the quarter.
Wall Street Action
- JMP Securities analyst Reni Benjamin reiterated an Outperform rating and a $12 price target on BioAtla.
- HC Wainwright & Co. analyst Arthur He also maintains a Buy rating and a $17 price target on BioAtla.
- EF Hutton analyst Tony Butler kept a Buy rating and a $25 price target on BioAtla.
Looking at AnaChart we see that BioAtla has lost 95% of its market value since its IPO in 2021, still with most keeping a bullish stance. Credit Suisse analyst Tiago Fauth turned bearish on the stock last year after the stock had dropped from $54 to $2, before that shortly after the IPO Fauth had a $70 price target.
CNBC featured an article about the average age of passenger vehicles on U.S. roads has reached a record high. Car owners are holding on to their vehicles for longer periods due to the low supply of new vehicles and high prices. The average age of a light-duty vehicle on U.S. roads increased by more than three months, reaching 12.5 years.
This rise in vehicle ages is beneficial for aftermarket parts suppliers like AutoZone, O’Reilly Automotive, and Advance Auto Parts, as well as dealer service centers. However, it is not promising for new vehicle dealers and sales. S&P Global Mobility reports that there are over 284 million vehicles in operation on U.S. roads, a slight increase from the 283 million last year.
Wall Street Action
- Wells Fargo analyst Zachary Fadem maintains AutoZone with an Overweight and raises the price target from $2850 to $3000. Fadem’s previous price target of $2850 was successfully set late last year after.
- JP Morgan analyst Christopher Horvers kept an Overweight and raised the price target from $2750 to $2975. Horvers similarly had recognized the trend with a $2,660 price target in September last year.