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On Tuesday, JPMorgan analyst Eric Joseph maintained an Overweight rating on Rocket Pharmaceuticals (NASDAQ:RCKT) with a $44.00 price target, significantly above the current trading price of $6.27. The firm’s position comes after a patient death in a pivotal phase 2 study of RP-A501 for Danon Disease led to a clinical hold by the FDA, which Joseph views as a significant, potentially insurmountable setback for the program. The analyst noted the pre-market reaction, with Rocket shares plunging approximately 66% while the XBI index saw a 1% increase. According to InvestingPro data, this decline is part of a broader trend, with the stock down over 70% in the past year.
The unfortunate event in the trial has raised concerns about the future of RP-A501, a key focus for investors. Joseph remarked that the market’s valuation of Rocket’s remaining pipeline is minimal and the sharp decline in the company’s stock price aligns with these concerns. Despite the market reaction, InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 9.19, and holds more cash than debt on its balance sheet. The cash position of Rocket Pharmaceuticals at the end of the first quarter of 2025 was around $3 per share, and projections indicate a year-end pro-forma of about $2 per share. InvestingPro subscribers have access to 8 additional key financial tips and comprehensive analysis of RCKT’s financial health.
The company is expected to collaborate with the FDA to investigate the cause of the patient’s capillary leak syndrome, which was initially believed to be a reaction to a novel immune pre-conditioning agent. The analyst suggests that this event could alter the risk/benefit assessment for A501, potentially leading to a more conservative threshold for approval than the current pivotal study design might support.
Investors are awaiting further clarity on the path forward, which is anticipated to be provided in an upcoming call scheduled for 8:30. However, Joseph anticipates that the stock may continue to face downward pressure until there is a resolution to the clinical hold.
In other recent news, Rocket Pharmaceuticals announced a serious adverse event during its Phase 2 trial of RP-A501, intended for treating Danon disease, leading to a patient’s death. The trial is currently on hold as Rocket collaborates with the FDA and an Independent (LON:IOG) Data Safety Monitoring Committee to investigate the cause. Despite this setback, Morgan Stanley (NYSE:MS) has maintained its Overweight rating for Rocket Pharmaceuticals, with a price target of $42.00. Meanwhile, Cantor Fitzgerald has increased its price target for Rocket to $30.00, citing positive preliminary data from a separate trial for RP-A601, a treatment for PKP2-Arrhythmogenic Cardiomyopathy.
The RP-A601 trial showed promising results, with improvements in heart function and quality of life for patients, although one patient experienced severe side effects. Rocket Pharmaceuticals reported having $318.2 million in cash and investments as of March 31 and plans to extend its operational funding into 2027 by refocusing its investments. The company is considering strategic options for its pipeline to optimize value, which may include the sale of Priority Review Vouchers. Rocket remains committed to advancing its gene therapy programs despite the challenges posed by the halted trial. The company continues to work diligently to ensure the safety of trial participants and address the concerns raised by the adverse event.
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