As Scholar Rock Holding Corp SRRK’s IPO quiet period expired Monday, four analysts came out with bullish recommendations on the stock. Here’s what one of them had to say.
The Rating
BMO Capital Markets analyst Do Kim initiated coverage with an Outperform rating and $31 price target.
The Thesis
Kim expects Scholar Rock to solve the challenges of modulating transforming growth factor beta, or TGF-b, signaling pathways, which would open a channel to broad, high-value indications.
The firm has opportunities in cancer, cardiovascular diseases and metabolic and muscular disorders, the analyst said.
Its SRK-015 candidate in particular could validate the platform by improving muscle function in spinal muscular atrophy, or SMA, Kim said.
“While Spinraza has changed the SMA treatment landscape and dramatically slowed down or stopped disease progression, we believe motor function gains have been limited, particularly in type 2 and 3 patients,” the analyst said. “We believe Spinraza therapy leaves considerable room for SMA patients to benefit from SRK-015's ability to increase skeletal muscle weight and strength.”
Phase 1 data in the fourth quarter is expected to confirm target engagement, while Phase 2 proof-of-concept data due in the second half of 2019 is seen to derisk the platform, according to BMO.
BMO projects peak global sales of $2.5 billion for SMA alone with preclinical programs in TGF-b1 and BMP6 set to eventually expand indication optionality.
Price Action
Scholar Rock shares were up 10.43 percent at $20.76 at the close Monday.
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