BMO Capital Sees Over 400% Upside For This Small Gene-Editing Stock

  • BMO Capital Markets initiated coverage on Graphite Bio Inc GRPH, with a price target of $12 and an Outperform rating.
  • The analyst notes that Graphite's gene editing approach involves a DNA repair mechanism that is known to be less vulnerable to errors. 
  • BMO writes that Graphite's platform is expected to be safer than existing approaches while maintaining sufficiently high efficacy.
  • The analyst writes that the company's GPH101 utilizes a gene correction strategy to reverse the SCD-driving mutation to restore normal adult hemoglobin (HbA) expression. 
  • It offers a differentiated strategy from competitors and could provide superior prevention of end-organ damage in the longer run.
  • A 25% probability of success for GPH101 and expected Ph1/2 readout in 2023 achieving ~55%+ HbA levels will drive more than 50% upside in the stock.
  • "Beyond SCD, Graphite's preclinical programs target diseases with high unmet need, including Beta-thalassemia and Alpha-1 Antitrypsin Deficiency... Graphite's gene editing platform allows for gene correction, replacement, and insertion, providing significant optionality around addressable diseases," BMO writes.
  • Price Action: GRPH shares are up 13.10% at $2.42 during the market session on the last check Friday.

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