Bullish indicating open at $55-$60, IPO prices at $37
On Tuesday, Goldman Sachs made a significant adjustment to its stance on Regenxbio Inc . (NASDAQ:RGNX), downgrading the stock from "Buy" to "Neutral" and reducing the price target dramatically to $14.00 from the previous $38.00. The revision comes as the investment firm raises concerns about the viability and competitive edge of Regenxbio’s gene therapy offerings. According to InvestingPro data, the company currently maintains a Fair Value that suggests it may be undervalued, despite showing an overall "Fair" financial health score.Want deeper insights? InvestingPro subscribers have access to over 30 additional financial metrics and exclusive analysis for RGNX.
Goldman Sachs analysts cited several reasons for the downgrade, including questions about the overall appeal of gene therapy for wet age-related macular degeneration (wetAMD) and diabetic retinopathy (DR). They noted that the patient population for these conditions is largely elderly, a demographic that may favor the less invasive and more affordably priced existing anti-VEGF therapies. InvestingPro data reveals concerning financial metrics, including weak gross profit margins and rapid cash burn, with the company reporting negative EBITDA of $223.55 million in the last twelve months.
The analysts also pointed to challenges in differentiating Regenxbio’s product from competitors, particularly in light of the invasive methods used to administer ABBV-RGX-314. Despite these concerns, the analysts acknowledged that the data on another of Regenxbio’s products, RGX-202, remains promising, although it is still in early stages of development.
The performance of Regenxbio stock since its inclusion in the Americas Buy list on June 7, 2024, was also a factor in the downgrade. The stock has seen a return of -41.7%, underperforming the Russell 2000’s return of 13.8% over the same period. Current trading at $7.89, the stock sits significantly below its 52-week high of $28.80, with a one-year total return of -51.33%. Despite these challenges, InvestingPro analysis shows the company maintains a healthy current ratio of 3.05, with liquid assets exceeding short-term obligations. This decline reflects a loss of investor confidence in the gene therapy sector within ophthalmology, exacerbated by the successful launches of aflibercept biosimilars and the recent approvals of high-dose anti-VEGF therapies that require less frequent injections.
The downgrade reflects a broader skepticism within the market regarding the future of gene therapies in ophthalmology, as investors weigh the benefits against the ease and cost of traditional treatments. Despite the downgrade, Goldman Sachs continues to monitor the progress of Regenxbio’s product pipeline and the evolving landscape of gene therapy treatments. Notably, broader analyst consensus remains cautiously optimistic, with the average price target suggesting significant upside potential from current levels. Get the complete financial picture with InvestingPro’s comprehensive research report, part of their coverage of over 1,400 US stocks.
In other recent news, Regenxbio has been making significant strides in the biotechnology sector. Raymond (NSE:RYMD) James initiated coverage on Regenxbio, setting a price target of $27.00, with an optimistic outlook based on key factors such as the potential launch of Elevidys and the anticipated regulatory trajectory for RGX-202. The firm also highlighted Regenxbio’s strong position in the market for gene therapies targeting neovascular retinal diseases.
In addition to this, H.C. Wainwright reaffirmed its Buy rating and adjusted its price target for Regenxbio to $36.00 following the announcement of a strategic partnership with Nippon Shinyaku. This partnership is set to advance RGX-121 and RGX-111, potential treatments for Mucopolysaccharidosis II and I, respectively. Regenxbio is set to receive an upfront payment of $100 million and could earn up to an additional $700 million in milestone payments.
Moreover, H.C. Wainwright increased the probability of approval for RGX-202 from 35% to 45% based on promising functional data from an early-stage clinical trial for a Duchenne muscular dystrophy treatment. Also, Raymond James reaffirmed its Outperform rating and $18.00 price target for Regenxbio shares following the release of encouraging initial functional data from the company’s ongoing Phase 1/2 trial of their Duchenne Muscular Dystrophy gene therapy, RGX-202. These are just some of the recent developments for Regenxbio.
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