On Tuesday, H.C. Wainwright adjusted its outlook on shares of Scholar Rock (NASDAQ:SRRK), raising the price target to $50.00 from the previous $40.00 while maintaining a Buy rating on the stock. The adjustment followed the announcement made by Biohaven that its Phase 3 RESILIENT study of taldefgrobep alfa for Spinal Muscular Atrophy (SMA) did not meet the primary outcome at Week 48 when compared to the placebo plus standard-of-care group.
The firm's analyst cites the failed study as an event that clears the way for Scholar Rock's apitegromab, as it faces fewer near-term challenges in the market. The firm now increases its global penetration assumptions for apitegromab, resulting in a revised peak sales projection of $1.12 billion by 2034, up from the earlier forecast of $985 million.
Despite the trial's primary outcome not being met, the analyst highlighted that efficacy signals were observed in subgroups based on age, ambulatory status, background therapy, and baseline myostatin levels. The most notable improvements were seen in Caucasian participants and those with measurable baseline myostatin, indicating potential for taldefgrobep alfa in treating SMA.
Biohaven's response to the study includes plans to discuss with the FDA for future steps, present detailed study data at an upcoming medical conference, and to initiate a placebo-controlled Phase 2 obesity trial towards the end of 2024.
In summary, H.C. Wainwright reaffirms its positive stance on Scholar Rock, reflected in the increased price target and sustained Buy rating, based on the anticipated market performance and potential of apitegromab.
In other recent news, Scholar Rock has seen a surge in analyst confidence following successful Phase 3 SAPPHIRE study results for its drug Apitegromab, a potential treatment for spinal muscular atrophy (SMA). Truist Securities, BMO Capital Markets, and H.C. Wainwright have all increased their price targets for the biopharmaceutical company, maintaining their respective Buy and Outperform ratings.
The positive results from the study led to significant improvements in motor function in patients, a development that has fueled analyst optimism for Scholar Rock's future prospects.
The biopharmaceutical company is also preparing for the U.S. commercial launch of Apitegromab in Q4 2025, following a planned submission of regulatory applications in Q1 2025. This comes on the heels of a successful $345 million follow-on offering, which raised Scholar Rock's cash balance to approximately $463 million.
In addition to its SMA treatment, Scholar Rock is also conducting the EMBRAZE Phase 2 study and developing SRK-439, both aimed at obesity management. These recent developments highlight Scholar Rock's consistent efforts to address unmet needs in the medical field.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Scholar Rock's (NASDAQ:SRRK) financial position and market performance. The company's market capitalization stands at $3.53 billion, reflecting significant investor interest. Scholar Rock has demonstrated impressive stock performance, with a 300.42% price return over the last three months and a 221.29% return over the past year, aligning with H.C. Wainwright's optimistic outlook.
InvestingPro Tips highlight that Scholar Rock operates with a moderate level of debt and maintains liquid assets that exceed short-term obligations, which could provide financial flexibility as it advances its pipeline, including apitegromab. However, it is worth noting that the company is not currently profitable, with a negative P/E ratio of -15.63 for the last twelve months as of Q3 2024.
Investors should be aware that while the stock has shown strong returns, it is trading at a high Price/Book multiple of 44.59, suggesting a premium valuation. This could be attributed to market expectations for apitegromab's potential, especially in light of the recent developments in the SMA treatment landscape.
For those seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for Scholar Rock, providing a deeper understanding of the company's financial health and market position.
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