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Investing.com -- Jefferies initiated coverage on Stoke Therapeutics (NASDAQ:STOK) with a Buy rating given a better risk-reward profile ahead of late-stage data for its lead drug candidate targeting Dravet syndrome, a severe and rare form of childhood epilepsy.
The firm sees potential for zorevunersen, an antisense oligonucleotide (ASO) therapy, to show disease-modifying effects, an outcome that could position it for peak sales of $1 billion to $1.5 billion, with upside to as much as $4 billion if efficacy proves to be profound.
Jefferies said the Phase I/II data so far suggest the drug can reduce seizures within six months and improve cognitive and behavioral function by nine months, a significant benchmark in a condition where neurodevelopment typically remains severely impaired.
A pivotal Phase III trial, now underway, is expected to deliver seizure reduction data by the second half of 2027.
In the meantime, Jefferies expects several catalysts, including updated long-term data and potential regulatory feedback from the FDA in the second half of 2025.
The drug has already received breakthrough therapy designation.
Jefferies estimates the probability of success for the Phase III trial at 40–50%, assigning a $27 price target based on a discounted cash flow model.
The firm noted Stoke’s $380 million in cash as of the first quarter provides runway into mid-2028.
While acknowledging risks tied to the small sample size of earlier studies and the challenges of Phase III execution, Jefferies said a statistically significant cognitive benefit could also establish Stoke as a broader platform player in neurological disorders.