On Monday, Guggenheim reaffirmed a Buy rating and a $26.00 price target for Larimar Therapeutics (NASDAQ:LRMR) following the company's presentation of encouraging clinical trial data. With the stock currently trading at $4.56, significantly below analysts' consensus target range of $12.36 to $36.00, InvestingPro data suggests the company is currently undervalued. Larimar Therapeutics showcased positive outcomes from its ongoing open-label extension (OLE) study for Friedreich's ataxia (FA).
The study indicated that daily administration of 25 mg of nomlabofusp, a recombinant frataxin (FXN), significantly increased tissue FXN levels, surpassing the 10-20% increase previously deemed sufficient by key opinion leaders to drive clinical efficacy.
Despite the short duration of the treatment, the severity of the disease, and the small patient pool, with 14 participants and efficacy observed in 8, the treatment demonstrated early trends of improvement. According to InvestingPro analysis, Larimar maintains a strong financial position with more cash than debt and a healthy current ratio of 13.1, providing runway for continued clinical development.
Get access to 8 more exclusive ProTips and comprehensive financial metrics with an InvestingPro subscription. These improvements were noted across several clinical outcomes, including reductions in the modified Friedreich's Ataxia Rating Scale (mFARS), FARS Activities of Daily Living (FARS-ADL), the Modified Fatigue Impact Scale, and better performance in the 9 Hole Peg Test at Day 90 compared to baseline.
The treatment was generally safe and well-tolerated, although two serious adverse events (SAEs)—an allergic reaction and a case of seizures—were reported. However, these did not necessitate any protocol changes.
Currently, Larimar is testing a 50 mg dose in six patients and plans to elevate all current participants to this higher dose. New participants will also start at 50 mg. This adjustment is expected to yield even stronger efficacy responses, with data from the 50mg cohort anticipated by mid-2025.
The management is actively discussing with the FDA the data required to support a potential accelerated approval, using FXN as a surrogate endpoint, with a Biologics License Application (BLA) submission targeted for the second half of 2025. Furthermore, the company has extended its cash runway guidance into the second quarter of 2026, from a previous estimate reaching into 2026.
Guggenheim's analysis suggests that the stock's significant weakness observed today is unwarranted, considering the favorable benefit/risk profile highlighted by the company's update. While acknowledging that safety concerns may continue to pressure the stock until long-term data from a larger patient cohort is available, Guggenheim views the current market valuation of $291 million, as presenting an attractive risk-reward proposition ahead of the mid-2025 update. The stock has experienced a 34% decline over the past six months, yet maintains a "FAIR" overall financial health score according to InvestingPro's comprehensive analysis.
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In other recent news, Larimar Therapeutics has reported both promising and concerning developments in its clinical studies.
The biotechnology company disclosed that two patients experienced serious adverse events related to its experimental therapy, nomlabofusp, leading to their withdrawal from the study. Despite this, Larimar Therapeutics emphasized that the therapy was generally well tolerated by the remaining participants.
Simultaneously, Larimar announced initial positive data from a study on nomlabofusp, a potential treatment for Friedreich's ataxia. The ongoing study showed that daily injections of the treatment were generally well tolerated and demonstrated a mean change in tissue frataxin levels.
Financially, the company reported a strong position with $203.7 million in cash and investments. Larimar is committed to its plan of submitting an application for potential accelerated approval to U.S. regulators in the second half of 2025.
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