Shares of Korro Bio and Wave Life Sciences sank Monday after an analyst argued the former is the better way to play the RNA-editing space.
RBC Capital Markets analyst Luca Issi's view follows results from Wave last week in two patients with alpha-1 antitrypsin disease, or AATD. In this condition, patients don't make any of the AAT protein which helps protect the lungs from damage. After a single dose of Wave's RNA-editing drug — which is partnered with GSK — both patients began making that protein for the first time.
The news proves the theory that RNA editing can work in humans, Issi said. And that's a boon for the entire field.
"Overall, while we acknowledge WVE is ahead, we continue to believe that KRRO is the better way to play RNA editing given unconstrained economics (vs. mostly GSK for WVE) and still about one-third of the enterprise value (of the company on Wall Street) despite the most last week," he said in a report.
On today's stock market, Korro Bio stock fell 5.2% to 75.86, reversing an earlier rise, while shares of Wave Life Sciences slipped 1.3% to 15.11.
Why Korro Bio Could Be A Better Play
Issi expects Wave to unveil additional details at its investor day on Oct. 30. So far, the results are from two patients, both of whom have two copies of the affected gene in AATD. He expects to see baseline characteristics of both as well as details of how quickly their bodies generated the missing AAT protein.
Korro Bio "thinks that WVE's data is fantastic news for the broader field, as the bear thesis (drugging ADAR won't work in humans) is officially off the table," he said following a meeting with Korro's management. ADAR, or adenosine deaminases acting on RNA, is the specific target of Wave Life Sciences' editing.
But there are some key differences between Korro's and Wave's approach. Korro Bio's drug uses an intravenous infusion. This is more cumbersome than Wave's under-the-skin injection, but it could drive higher protein levels, he said.
Further, Korro Bio owns its entire program, while most of the economics from Wave Life Sciences' efforts will ultimately go to partner GSK.
Korro expects to unveil initial clinical proof-of-concept data next year, he said. Issi raised his price target on Korro Bio to 105 from 95, and on Wave Life Sciences to 17 from 15. He has an outperform rating on the former and a sector perform rating on the latter.
"We are impressed by recent execution across three programs (from Wave Life Sciences), but with RNA editing likely to be the primary focus of investors going forward, we believe KRRO is the better way to play the space," he said.
Both Top 1% Stocks
IBD Digital shows high ratings for both Korro Bio and Wave Life Sciences stocks. The duo has perfect Relative Strength Ratings of 99, which means they outrank 99% of all stocks in terms of 12-month performance.
Wave stock broke out of a lengthy consolidation with a buy point at 6.63 on its news last week.
Similarly, Korro shares leapfrogged their 200-day moving average, MarketSurge shows.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
