Leerink maintains Outperform rating on Applied Therapeutics amid recent weakness

On Monday, Leerink Partners maintained its Outperform rating and $14.00 price target for Applied Therapeutics (NASDAQ:APLT).

The firm expressed continued confidence in the stock following investor meetings with the company's management. The discussions centered on the recent cancellation of the Adcom meeting for govorestat in galactosemia, the steps remaining before potential approval, commercialization plans, and the upcoming indication for govorestat in sorbitol dehydrogenase (SORD) deficiency.

Applied Therapeutics' shares surged approximately 69% against a slight decline in the XBI biotech index due to the Adcom cancellation news. Despite this jump and the subsequent market chatter and options activity indicating some investor skepticism about govorestat's approval for galactosemia, Leerink remains optimistic. The firm's stance is based on a comprehensive review of the data since initiating coverage earlier in the year, which supports the drug's approval.

Leerink highlighted that the recent market weakness presents an opportunity for investors to anticipate the potential launch of govorestat for galactosemia. Furthermore, the approval process for SORD deficiency is expected to be more straightforward. Recent data pointing to additional mutations that may cause SORD deficiency suggest this could be a larger market than initially expected.

The firm reiterated its positive outlook and $14 price target for Applied Therapeutics, emphasizing the upcoming milestones for govorestat. These include its potential approval for galactosemia, with a PDUFA date set for November 28, 2024, and its subsequent indication for SORD deficiency.

In other recent news, analysts from Baird, William Blair, and RBC Capital Markets have maintained an Outperform rating on Applied Therapeutics, highlighting the company's focus on developing treatments for rare diseases. The analysts' optimism is partly due to recent developments and the potential for significant value increases in the upcoming year.

InvestingPro Insights

Recent data from InvestingPro provides additional context to Leerink Partners' optimistic outlook on Applied Therapeutics (NASDAQ:APLT). The company's stock has shown remarkable performance, with a 246.07% price total return over the past year and a 70.73% return in the last three months. This aligns with the article's mention of the recent 69% surge in share price following the Adcom cancellation news.

InvestingPro Tips highlight that APLT holds more cash than debt on its balance sheet and has liquid assets exceeding short-term obligations. These factors could provide the company with financial flexibility as it approaches potential approval and commercialization of govorestat for galactosemia and SORD deficiency.

However, investors should note that analysts anticipate a sales decline in the current year, and the company is not expected to be profitable this year. This information underscores the importance of the upcoming milestones mentioned in the article, particularly the PDUFA date for govorestat in galactosemia on November 28, 2024.

For those seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for APLT, providing a deeper understanding of the company's financial health and market position.

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