On Thursday, Stifel reaffirmed its Buy rating on Third Harmonic (NASDAQ:HLIT) Bio (NASDAQ: THRD) with a steadfast price target of $23.00. The endorsement comes after the company's third-quarter 2024 update, which highlighted the anticipated readout from their Phase 1 Single Ascending Dose/Multiple Ascending Dose (SAD/MAD) study of THB335, expected in the first quarter of 2025.
The study's forthcoming results are seen as a significant turning point for the stock. In addition to safety and pharmacokinetics (PK), the reduction of tryptase levels will be a crucial metric from the study due to its observed correlation with efficacy in Chronic Spontaneous Urticaria (CSU) and Chronic Inducible Urticaria (CIndU)—conditions treated by KIT-class drugs. The analyst noted the importance of tryptase as a biomarker, as emphasized by Celldex Therapeutics (NASDAQ:CLDX)' extensive PK/Pharmacodynamics (PD) data from their Barzolvolimab program.
Third Harmonic Bio's previous work with THB001 in Phase 1 to Phase 1b trials suggests that a significant reduction in tryptase levels in the MAD portion of the upcoming study could lead to efficacy results comparable to those seen with Barzolvolimab in longer-duration studies. However, the full therapeutic index of KIT inhibition remains to be fully understood, leaving the optimal target range at the lower end open to determination.
The focus on tryptase as a biomarker is based on its strong association with positive outcomes across the KIT-class of drugs, which includes Barzolvolimab, currently the program with the most extensive PK/PD database. Stifel's outlook is buoyed by the potential for Third Harmonic Bio's THB335 to show similar reductions in tryptase levels, which could be indicative of a successful therapeutic profile.
In other recent news, Third Harmonic Bio has received an upgrade from Morgan Stanley (NYSE:MS), raising its stock rating from Equalweight to Overweight. The firm also elevated its price target for the biotechnology company's shares to $20.00, up from the previous $12.00.
This change in stance follows Third Harmonic Bio's announcement regarding the accelerated progress of its drug, THB335, which is currently in Phase 1 trials. The release of data related to THB335 is now anticipated in the first quarter of 2025, earlier than the initial projection.
Morgan Stanley's analyst underscored the potential of this upcoming data to de-risk the stock and expressed confidence in the future performance of Third Harmonic Bio.
InvestingPro Insights
Third Harmonic Bio's financial landscape offers some interesting insights that complement the recent Stifel analysis. According to InvestingPro data, the company's market capitalization stands at $545.36 million, reflecting investor interest in its potential. Despite the optimistic Buy rating from Stifel, it's worth noting that Third Harmonic Bio is not currently profitable, with a negative P/E ratio of -17.85 and an operating income of -$46.61 million over the last twelve months as of Q2 2024.
However, the company's stock has shown remarkable performance, with a 120.43% price total return over the past year. This aligns with one of the InvestingPro Tips, which highlights the "high return over the last year." Additionally, the stock has demonstrated "strong return over the last three months," with a 21.08% price total return in that period.
Another relevant InvestingPro Tip indicates that Third Harmonic Bio "holds more cash than debt on its balance sheet," which could be crucial for funding ongoing research and development, including the Phase 1 SAD/MAD study of THB335 mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Third Harmonic Bio, providing a deeper understanding of the company's financial health and market position.
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