On Monday, BofA Securities adjusted its stance on Fulcrum (LON:FMETF) Therapeutics (NASDAQ:FULC), upgrading the stock from Underperform to Neutral and doubling the price target to $10.00 from $5.00.
The revision comes as the biotechnology company approaches a critical phase 3 readout for its drug candidate losmapimod, which is being developed to treat facioscapulohumeral muscular dystrophy (FSHD), a rare disease with no approved therapies.
The analyst noted that the upgrade is in anticipation of the phase 3 trial results expected by the end of October. FSHD, which primarily affects upper extremity mobility, has been a challenging area for drug development.
Fulcrum Therapeutics' previous pivotal study did not meet its primary endpoint, but subsequent post-hoc analysis led to the design of a new study with a different endpoint known as reachable workspace (RWS (LON:RWS)).
Discussions with two key opinion leaders (KOLs) revealed a positive outlook on the phase 3 readout, given the functional benefits observed in the phase 2 study as measured by RWS.
The KOLs believe that RWS is an accurate measure of disease progression and that stabilization of RWS would be considered clinically meaningful. Replicating phase 2 results, which showed a 10% placebo-adjusted change at 48 weeks, would be seen as a success.
The analyst expressed caution due to the inherent unpredictability of clinical trials, particularly concerning the control arm's response. Despite this, the probability of success for the study was adjusted to 50%. The value of losmapimod to Fulcrum's share price was estimated to be $9, contributing to the revised $10 price objective.
As the market awaits the phase 3 outcomes, BofA Securities remains cautious about further de-risking the program. Additionally, the firm highlighted the ongoing development of pociredir for sickle cell disease (SCD) as a potential concern for Fulcrum's stock performance.
In other recent news, Fulcrum Therapeutics has experienced several significant developments. RBC Capital maintained its Outperform rating on the company. It increased its price target from $14.00 to $15.00, based on the anticipated results from the phase III REACH study of losmapimod, a potential treatment for Facioscapulohumeral Muscular Dystrophy (FSHD).
RBC's assessment suggests that the study's statistical significance bar is likely higher than expected, indicating a potential path to success for losmapimod.
In addition, Fulcrum has made strides in its operations, including a recent exchange of common stock for pre-funded warrants with two institutional stockholders, RA Capital Healthcare Fund, L.P., and an unnamed entity.
The company also appointed Isabel Kalofonos as Chief Commercial Officer and Heather Faulds as Chief Regulatory Affairs & Quality Assurance Officer, roles expected to contribute to submitting a New Drug Application for losmapimod.
Fulcrum is progressing with its Phase 3 REACH trial for losmapimod and anticipates reporting top-line data by the end of October 2024. In collaboration with Sanofi (EPA:SASY) (NASDAQ:SNY), the company is preparing for regulatory filings and the commercial launch of losmapimod outside the U.S.
These recent developments underscore Fulcrum Therapeutics' commitment to advancing its clinical trials and preparing for the commercialization of losmapimod.
InvestingPro Insights
In light of BofA Securities' recent upgrade of Fulcrum Therapeutics, it's worth considering additional metrics that can provide investors with a broader understanding of the company's financial health and market performance. InvestingPro data indicates a significant revenue growth for Fulcrum Therapeutics, with the last twelve months as of Q2 2024 showing an impressive increase of 2582.55%. This growth is further highlighted by a quarterly revenue growth of 8990.91% for Q2 2024. Despite the challenges in profitability, as evidenced by the negative operating income margin of -40.15% and a P/E ratio of -26.35, the company's stock has experienced a high return over the last year, with a 64.23% price total return.
InvestingPro Tips suggest that analysts are optimistic about the company's sales growth in the current year. Additionally, Fulcrum Therapeutics holds more cash than debt, which could provide a cushion for future operations and investments. However, it's worth noting that the company does not pay dividends, and analysts do not anticipate profitability this year, aligning with the caution expressed by BofA Securities regarding clinical trial outcomes.
For investors seeking a deeper dive into Fulcrum Therapeutics' prospects, InvestingPro offers additional insights. Currently, there are 5 more tips available that could help in making a more informed decision. These tips and real-time data can be found by visiting the InvestingPro platform for Fulcrum Therapeutics at https://www.investing.com/pro/FULC.
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