BofA Securities has updated its stance on Roivant Sciences (NASDAQ: NASDAQ:ROIV), raising the price target to $12.50 from the previous $12.00, while maintaining a Neutral rating on the company's stock.
The adjustment follows Roivant Sciences' announcement of a Phase 2-ready program, mosliciguat, aimed at treating interstitial lung disease (PH-ILD).
The analyst from BofA Securities noted that Phase 1 data provides a solid basis for further investigation into mosliciguat's effectiveness and safety in the next phase of trials.
Mosliciguat has shown promising results in improving Pulmonary Vascular Resistance (PVR), a key measure of pulmonary vascular abnormalities, in a patient group suffering from Pulmonary Arterial Hypertension (PAH), which could bode well for its use in PH-ILD.
Despite the positive indicators from early-stage trials, the firm has called for caution, indicating a desire to see successful Phase 2 data, expected in the second half of 2026, before fully endorsing the drug.
The Phase 1 results, which have demonstrated favorable comparisons to approved PAH treatments, are yet to establish a direct correlation with the anticipated registrational endpoint for PH-ILD, the 6-minute walk distance (6WMD) test.
The revised price objective from BofA Securities reflects the inclusion of a risk-adjusted forecast for mosliciguat. However, the analyst reiterated a Neutral rating, suggesting that recent developments, including updates on Graves' disease and PH-ILD treatments, might have already been factored into Roivant Sciences' stock price.
In other recent news, Roivant Sciences has made significant strides in the biopharmaceutical field. The company's subsidiary, Pulmovant, reported encouraging results from a Phase 1b ATMOS study for mosliciguat, a potential treatment for pulmonary hypertension associated with interstitial lung disease.
The study demonstrated a significant reduction in pulmonary vascular resistance, prompting the initiation of a global Phase 2 study named PHocus.
Meanwhile, another Roivant subsidiary, Immunovant (NASDAQ:IMVT), reported positive outcomes from its Phase 2a trial of batoclimab, a treatment for Graves' Disease. The trial showed a 76% response rate in patients unresponsive to antithyroid drugs after 12 weeks of high-dose treatment. A pivotal trial for the treatment is expected to commence by December 31, 2024.
On the financial front, Roivant Sciences reported $18.4 million in product revenue from VTAMA and a robust $5.7 billion in cash and cash equivalents. Despite a slower than expected launch of Vtama for psoriasis, H.C. Wainwright maintained its 'Buy' rating for Roivant Sciences, revising its peak sales estimate for Vtama to $910 million.
Furthermore, Roivant has completed enrollment for the Phase 3 study of brepocitinib in dermatomyositis and Immunovant's MG study. The company is also preparing for the launch of VTAMA in atopic dermatitis after year-end approval.
InvestingPro Insights
In light of BofA Securities' recent update on Roivant Sciences, a look at the real-time data from InvestingPro can provide investors with additional context. Roivant Sciences boasts a market capitalization of $9.01 billion, with a strikingly low P/E ratio of 2, reflecting investor confidence in the company's earnings potential relative to its share price. Despite this, the adjusted P/E ratio for the last twelve months as of Q1 2025 stands at -135.04, likely due to a temporary earnings dip or market expectations of future losses.
Revenue growth remains robust, with an impressive 101.44% increase over the last twelve months as of Q1 2025. This figure is further bolstered by a quarterly revenue growth of 154.96% in Q1 2025, indicating a strong upward trajectory for the company's sales. However, it's worth noting that Roivant Sciences has been grappling with negative gross profit margins, which have reached -230.59% in the same period, underscoring the challenges in cost management and profitability.
InvestingPro Tips highlight that Roivant Sciences has been aggressive in share buybacks and holds more cash than debt, which is a positive sign for financial stability. The company's liquid assets also exceed its short-term obligations, providing a cushion for operational flexibility. On the other hand, analysts express caution with a forecasted net income drop this year and do not anticipate profitability within this timeframe. For those interested in further insights, InvestingPro offers additional tips on their platform.
For investors considering Roivant Sciences in light of the mosliciguat program's potential, these financial metrics and InvestingPro Tips can help form a more comprehensive view of the company's current position and future prospects.
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