Rocket Pharmaceuticals stock rating cut at TD Cowen

On Tuesday, TD Cowen analysts downgraded Rocket Pharmaceuticals (NASDAQ:RCKT) stock from Buy to Hold following a patient death in a clinical trial. The downgrade has intensified pressure on the stock, which according to InvestingPro data has already declined over 70% in the past year, with shares currently trading at $2.37. The trial, which was evaluating the company’s RP-A501 treatment for Danon disease, experienced a setback when a patient died due to complications believed to be associated with a C3 inhibitor added to the treatment regimen.

The C3 inhibitor was introduced in response to thrombotic microangiopathies (TMAs) that had been observed in the pivotal trial. The analysts at TD Cowen expressed their condolences for the patient’s death and noted that while the C3 inhibitor could presumably be removed, the unresolved safety risk posed by the TMAs warranted a more cautious stance on the stock.

The firm highlighted the importance of resolving the safety issues before reconsidering their position. The analysts stated, "Given this unresolved safety risk and the cash runway, we believe it is prudent to move to the sidelines/Hold until it is resolved."

The downgrade comes as a significant development for Rocket Pharmaceuticals, which has been advancing its gene therapy platform aimed at treating rare and devastating diseases. The company has not yet provided a detailed response to the incident or the downgrade. InvestingPro analysis shows the company maintains a strong liquidity position with a current ratio of 9.19, though it’s currently experiencing accelerated cash burn - crucial factors for investors monitoring the situation. Get access to 8 more key ProTips and comprehensive analysis with an InvestingPro subscription.

Investors and stakeholders in Rocket Pharmaceuticals are now watching closely for further updates on the situation and any potential impact on the company’s broader clinical development plans. The resolution of the safety concerns will be critical for the future trajectory of RP-A501 and the company’s valuation in the market. Despite current challenges, analyst price targets range from $12 to $55, suggesting significant potential upside if safety concerns are resolved. Discover detailed valuation metrics and access the comprehensive Pro Research Report, available exclusively on InvestingPro.

In other recent news, Rocket Pharmaceuticals has encountered significant developments impacting its operations and investor outlook. The company reported a modestly better-than-expected GAAP EPS, surpassing consensus estimates by $0.02, and holds a robust financial position with $318 million in cash expected to last until the fourth quarter of 2026. However, a patient death in its pivotal phase 2 study of RP-A501 for Danon Disease has led to a clinical hold by the FDA, raising concerns about the future of the program. This event has prompted analysts like William Blair to maintain an Outperform rating, while BofA Securities adjusted its price target to $32, reflecting optimism for the company’s prospects despite the setback.

BMO Capital Markets and Jefferies have both reiterated their Outperform and Buy ratings, respectively, underscoring the potential therapeutic benefits of RP-A501 despite the risks associated with the recent adverse events. JPMorgan, maintaining an Overweight rating with a $44 target, views the FDA’s clinical hold as a significant challenge but believes Rocket Pharmaceuticals will collaborate with the FDA to address safety concerns. The company is also progressing with other programs, including the phase 2 trial of RP-A501 for Danon Disease, with results anticipated by mid-2026, and the rolling submission of RP-L102’s Biologics License Application for Fanconi Anemia expected by the end of 2025 or early 2026.

Rocket Pharmaceuticals’ financial sustainability remains a focal point for investors amid these developments, particularly with the anticipated milestones and the company’s strategic plans for its gene therapy pipeline. The recent developments have sparked varied reactions from analysts, with some expressing continued optimism about the company’s long-term potential and others highlighting the challenges posed by the clinical hold. Investors are keenly awaiting further updates from the company, especially regarding the resolution of the clinical hold and its impact on Rocket Pharmaceuticals’ future trajectory.

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