On Thursday, BMO Capital Markets adjusted its outlook on Scholar Rock (NASDAQ:SRRK) shares, increasing the price target to $31 from the previous target of $29, while maintaining an Outperform rating on the company's stock. The revision reflects the firm's anticipation of the upcoming results from the pivotal Phase 3 SAPPHIRE trial, slated to be released in the fourth quarter of 2024.
The analyst from BMO Capital expressed confidence in the potential of the SAPPHIRE trial, which is designed to assess the efficacy of apitegromab in selected patients. The market's current valuation of Scholar Rock's shares suggests skepticism regarding the trial's outcome, as well as concerns over a possible negative result from Biohaven's Phase 3 RESILIENT trial, expected in the second half of 2024. The RESILIENT trial's results could be publicized prior to those of the SAPPHIRE trial.
The firm's analyst highlighted the favorable risk/reward balance for Scholar Rock as the SAPPHIRE trial progresses. The trial aims to show a benefit in patients most likely to respond to the treatment with apitegromab. In light of the potential outcomes and the design of the trial, BMO Capital sees merit in increasing the price target for Scholar Rock.
The analyst's report included a scenario framework, detailing both bullish and bearish cases for Scholar Rock's stock. This framework helps to illustrate the possible outcomes and their implications for the company's valuation.
The adjustment by BMO Capital comes as Scholar Rock prepares to reach a significant milestone with the release of the SAPPHIRE trial data. The company's stock price and investor sentiment are likely to be influenced by the trial results, which are now reflected in the updated price target from BMO Capital.
In other recent news, Scholar Rock has made significant strides in the biopharmaceutical sector with a series of promising developments. BMO Capital Markets and Piper Sandler have both maintained favorable ratings on the company, with BMO sustaining their Outperform rating and a $29.00 price target, while Piper Sandler reaffirmed its Overweight rating with a steady price target of $28.00.
The company has recently presented encouraging data from a Phase 1 trial of SRK-181, a drug designed to address resistance to certain cancer therapies. The trial showed positive response rates in patients with advanced solid tumors resistant to anti-PD-(L)1 therapies. In addition, Scholar Rock has initiated a Phase 2 EMBRAZE trial for apitegromab in obesity, which is being closely monitored by investors.
While Scholar Rock is not currently generating revenue, with estimates projecting $0 for both 2023 and 2024 but anticipating $90 million in 2025, the company has maintained investor interest.
The company's cash reserves, standing at $238 million at the end of the last quarter, ensure the continuity of its research and development endeavors. These recent developments spotlight Scholar Rock's ongoing efforts in the biopharmaceutical sector.
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