Avidity Biosciences unveiled promising results for its Duchenne muscular dystrophy treatment on Friday. The top-notch biotech stock catapulted, while shares of rival Sarepta Therapeutics toppled.
Patients with Duchenne muscular dystrophy, or DMD, don't make enough dystrophin. The dystrophin protein helps keep muscles intact. After receiving Avidity's drug for four months, patients had a 25% increase in dystrophy production and reached dystrophin levels that were at 54% of normal.
Chardan analyst Keay Nakae lists RNA stock as a top pick for 2024. He says the results help validate Avidity's approach. The drug, del-zota, works by skipping a genetic mutation called exon 44 to boost the production of dystrophin.
"This data positions the company to continue to evaluate additional DMD 44 patients in order to accumulate sufficient patient experience that could support a possible accelerated approval," Nakae said in a report to clients.
RNA stock surged 12.1% to 46.95. The biotech stock is flirting with an intraday record high at 48.80, achieved on July 29. Sarepta stock, on the other hand, fell 8.3% to 125.12.
Biotech Stock: Functionality Data To Come
Muscle biopsies also showed a roughly 80% decrease in levels of creatine kinase. This enzyme shows up in damaged muscle tissues. Elevated levels can indicate DMD.
But it's important to note that the results don't measure the effectiveness of Avidity's drug on functionality. Nakae, the Chardan analyst, says Avidity will likely test that next. He kept his buy rating on RNA stock and hiked his price target to 60 from 45.
In 2016, the Food and Drug Administration established a precedent for DMD treatments. These drugs can win accelerated approval if they boost dystrophin production enough that it's "reasonably likely to predict clinical benefit," he said.
He notes the exon 44 patient population is smaller. There are about 900 patients in the U.S. with this form of Duchenne muscular dystrophy. So, Avidity will likely need to test a smaller pool to show the benefit of del-zota.
Rivaling Sarepta's Gene Therapy?
Later, Avidity will focus on other patient groups, including those with exon 45, 51 and 53 mutations — making it a potential rival to Sarepta's drugs. Sarepta has three exon-skipping drugs and a gene therapy.
But Mizuho Securities analyst Uy Ear says the sell-off for Sarepta stock was overdone. He doesn't expect Avidity's drug to pose a competitive threat to Sarepta's gene therapy, Elevidys. Elevidys helps the body make a shortened version of the dystrophin protein.
"First, exon 44 skipping represents less than 5% of the DMD opportunity, and as such this genotype represents a small fraction of the overall Elevidys opportunity," he said in a report. "Second, while the treatment paradigm for DMD is evolving with the introduction of gene therapy, we believe there is the potential for patients to receive exon-skipping products post Elevidys treatment."
He kept his outperform rating on Sarepta stock, noting patients are unlikely to forgo treatment with a gene therapy to wait for del-zota. In Duchenne muscular dystrophy, "time is muscle," so the earlier the better when it comes to treatment.
RNA Stock Is Highly Rated
Similarly, RBC Capital Markets analyst Brian Abrahams further noted exon-skipping drugs only account for 6% of his end-of-the-decade sales estimate for Sarepta. He maintained his outperform rating and 181 price target on the biotech stock.
RNA stock ranks in the top 1% of all stocks when it comes to 12-month performance. The biotech stock has a best-possible IBD Digital Relative Strength Rating of 99. Sarepta stock has an RS Rating of 90.
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