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Investing.com - Morgan Stanley (NYSE:MS) upgraded Abivax (NASDAQ:ABVX) from Equalweight to Overweight and dramatically raised its price target to $71.00 from $12.00 following positive Phase 3 clinical trial results. The stock has shown remarkable momentum, gaining over 64% in the past six months and currently trades near its 52-week high of $13.17, according to InvestingPro data.
The upgrade comes after Abivax reported topline induction results from its Phase 3 ABTECT program in ulcerative colitis (UC), which showed pooled placebo-adjusted clinical remission of 16.4% for the 50mg dose, exceeding the approximately 15% threshold anticipated by investors and experts.
The results also surpassed the company’s Phase 2b findings, increasing Morgan Stanley’s confidence in the potential success of the maintenance component of the ABTECT trial and improving the peak sales outlook for Obefazimod as an efficacious, well-tolerated oral option for inflammatory bowel disease.
Morgan Stanley established bull and bear case scenarios of $118 and $1 respectively, while acknowledging it may have relied too heavily on Phase 2b results when assessing potential outperformance in the Phase 3 trial.
The firm identified several risks to its Overweight rating, including potential imbalances in baseline patient characteristics, disappointing 44-week maintenance data, safety updates that could negatively impact the drug’s risk/benefit profile, and cautious key opinion leader feedback given the lack of maintenance data and Obefazimod’s unique mechanism. Financial metrics from InvestingPro highlight additional considerations, including rapid cash burn and negative EBITDA of -$188.7 million in the last twelve months.
In other recent news, Abivax has reported significant advancements in its Phase 3 clinical trials for the ulcerative colitis treatment, obefazimod. The drug achieved its primary endpoints in two major studies, ABTECT-1 and ABTECT-2, demonstrating statistically significant clinical remission rates at an eight-week mark with a 50 mg dose. Following these positive results, several analyst firms have adjusted their price targets for Abivax. Leerink Partners increased its price target from $20 to $74, maintaining an Outperform rating, while Guggenheim raised its target from $50 to $101, continuing with a Buy rating. JMP Securities also raised their price target from $33 to $95, keeping a Market Outperform rating. These adjustments reflect the strong data from the trials, which involved 1,275 patients across 36 countries. The drug’s performance exceeded expectations, particularly concerning the FDA’s primary endpoint of clinical remission. Investors are closely watching these developments, as the drug’s success could significantly impact Abivax’s market position.
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