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On Tuesday, William Blair analyst Sami Corwin maintained an Outperform rating on Rocket Pharmaceuticals (NASDAQ:RCKT), despite recent challenges. The company, currently valued at $268 million, has seen its stock price decline to $2.48, marking a 50% drop year-to-date according to InvestingPro data. The biotechnology company experienced a patient death and a clinical hold on its trial for RP-A501, a gene therapy treatment. Corwin noted the hold as a necessary step due to the safety event involving capillary leak syndrome (CLS), which had not been previously observed with RP-A501 or similar therapies.
Corwin expressed optimism, suggesting that the severe adverse event (SAE) might be linked to the recent addition of a C3 inhibitor to the immunosuppression protocol rather than the AAV9 vector used in the therapy. The analyst pointed out that CLS cases were reported only in patients who received the C3 inhibitor. Corwin is looking forward to further information on the CLS mechanism and a plan for resuming the trial after discussions with the FDA.
The analyst also commented on the incidences of thrombotic microangiopathy (TMA), which are concerning but noted that the affected patients are recovering well. William Blair anticipates that enhanced genetic screening could reduce future occurrences of such events in the trial.
Despite the stock’s significant drop, approximately 60%, following the announcement of the clinical hold, Corwin believes that investors are mainly concerned about the program’s safety and the timeline for resolving the clinical hold. The firm maintains that there is a viable path forward for the program once a revised safety plan is in place. InvestingPro data shows the company maintains strong liquidity with a current ratio of 9.19, though it’s currently burning through cash rapidly. Get access to 8 more exclusive InvestingPro Tips and comprehensive analysis through the Pro Research Report.
Finally, Corwin highlighted that there is no implication for Rocket’s other clinical cardiovascular program, RP-A601, which uses a different AAV vector and does not incorporate the C3 inhibitor, suggesting that the recent events should not affect the perception of this separate program. Despite current challenges, analyst consensus remains strongly bullish, with price targets ranging from $12 to $55, significantly above current trading levels. Discover more detailed insights and Fair Value analysis with an InvestingPro subscription.
In other recent news, Rocket Pharmaceuticals reported a modestly better-than-expected GAAP EPS, surpassing consensus estimates by $0.02. The company’s financial position remains strong, with $318 million in cash, expected to last until the fourth quarter of 2026. However, Rocket Pharmaceuticals is currently facing a significant challenge due to a patient death in its Danon disease trial, leading to a clinical hold by the FDA. This development has resulted in scrutiny over the safety of its RP-A501 gene therapy.
BMO Capital Markets maintained its Outperform rating with a $30 price target, despite the FDA’s hold, citing the severe nature of Danon disease as a rationale for continuing the trial. Jefferies also retained a Buy rating with a $29 price target, highlighting concerns about the clinical hold’s impact on the trial’s timeline and Rocket’s cash burn. Meanwhile, JPMorgan and Morgan Stanley (NYSE:MS) maintained their Overweight ratings with price targets of $44 and $42, respectively. Both firms emphasized the need for Rocket Pharmaceuticals to collaborate with the FDA to address the safety concerns raised by the trial’s serious adverse event. These recent developments have placed Rocket Pharmaceuticals under considerable pressure, with investors closely watching for updates on the trial’s future.
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