Citi: Solid Biosciences Rally Unsupported By Fundamentals

Following the near 100% rally in shares of Solid Biosciences Inc SLDB in August, one Citigroup analyst said the stock price is diverging from worsening fundamentals.

The Analyst

Joel Beatty downgraded Solid Biosciences from Neutral to Sell and maintained a $6 price target.

The Thesis

Solid Bioscience's gene therapy candidate SGT-001 for treating Duchenne muscular dystrophy is unlikely to be approved in the U.S. in its current form because of dystrophin expression data that is unlikely to be competitive, even with the recent increased dosing, Beatty said in a Wednesday note. (See his track record here.)

Even if the increased dosing brings about the desired result, the analyst said he sees additional challenges pressuring the stock. The company could lag in manufacturing given its low cash levels, which could impact further enrollment in clinical trials and commercialization, he said. 

The anemic cash balance also makes the company a less attractive acquisition target, Beatty said. 

With Solid Biosciences trailing behind Sarepta Therapeutics Inc SRPT and Pfizer Inc. PFE in the race to the market, the former could be forced to pitch its therapy to difficult-to-treat, mostly older, heavier patients, the analyst said. 

"Using SLDB and PFE's percent dystrophin positive fibers data as a surrogate for transduction efficiency, we model that SLDB could achieve a transduction efficiency in the 40-60% range at their current dosing of 2E14 vg/kg, which, even at the high end of the range, is still considerably inferior to SRPT's ~81%." 

The Price Action

Solid Bioscience shares were tumbling 10.34% to $8.15 at the time of publication Thursday. 

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