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On Friday, H.C. Wainwright adjusted its price target on Lexeo Therapeutics (NASDAQ:LXEO) shares, lowering it to $15.00 from the previous $23.00, while maintaining a Buy rating on the stock. Currently trading at $2.70, with a market cap of $89.61M, LXEO has seen its shares decline over 80% in the past year. The revision follows recent developments in the gene therapy sector presented at the American Society for Cell and Gene Therapy (ASGCT) conference in New Orleans, LA.
Mitchell Kapoor of H.C. Wainwright cited competitor Rocket Pharmaceuticals (NASDAQ:RCKT)’ presentation on their gene therapy, RP-A601, for PKP2-associated arrhythmogenic cardiomyopathy (ACM) as a validation for Lexeo’s LX2020. According to InvestingPro data, analyst consensus remains strongly bullish, with price targets ranging from $16 to $28. However, he noted that Rocket faced safety challenges, which he believes places LX2020 in a more favorable position.
Rocket Pharmaceuticals showcased data from three patients, with one showing a significant decline in mRNA copies over time, raising concerns about the sustainability of the treatment. In contrast, Lexeo’s early data from two patients at Month 3 showed promising mRNA levels.
Despite the positive efficacy biomarkers, Kapoor pointed out safety issues with Rocket’s RP-A601. Two patients had significant reductions in premature ventricular contractions (PVCs), but one with a high baseline experienced minimal improvement. On the other hand, LX2020 demonstrated a 67% reduction in PVCs for the one patient who reached the six-month follow-up.
The price target adjustment by H.C. Wainwright also takes into account an increase in potentially dilutive securities and a raised discount rate to 13% from 12%. This change reflects the heightened investor expectations for gene therapy companies in the current market and regulatory climate. The firm reaffirmed its confidence in Lexeo with a reiterated Buy rating. InvestingPro analysis shows the company maintains a strong liquidity position with more cash than debt and a current ratio of 3.42, though its overall financial health score is currently rated as Weak. Discover 13 additional key insights and comprehensive analysis available through the Pro Research Report.
In other recent news, Lexeo Therapeutics reported a fourth-quarter loss of $0.78 per share, which was $0.06 worse than analyst estimates. Despite this, the company shared positive interim data from its clinical trials, leading to a significant increase in stock value. Lexeo’s LX2006 program for treating Friedreich’s ataxia cardiomyopathy (FA CM) showed promising results, with patients experiencing reductions in left ventricular mass index and increased frataxin expression, a key therapeutic goal. H.C. Wainwright maintained a Buy rating on Lexeo, citing the favorable safety profile and potential of LX2006, with a price target of $23.00. Meanwhile, Leerink Partners adjusted their price target for Lexeo to $18 but maintained an Outperform rating, highlighting the potential of the company’s PKP2 gene therapy program. Lexeo’s discussions with the FDA have led to changes in the trial protocol for LX2006, focusing on frataxin protein expression, which could streamline regulatory approval. Additionally, Lexeo announced regulatory clarity on its LX2006 program, aligning with the FDA on using frataxin expression increases as an endpoint. The company ended 2024 with $128.5 million in cash and investments, expected to fund operations into 2027.
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