On Wednesday, Needham maintained a Buy rating on shares of Praxis Precision Medicines Inc. (NASDAQ: PRAX) and increased the price target to $151 from $145. The adjustment follows Praxis's recent conference call, which discussed Phase 2 EMBOLD study data for relutrigine, a drug aimed at reducing motor seizures. Following the call, shares of Praxis Precision Medicines rose by 4.2%.
The company's stock uptick came after the release of positive proof-of-concept study results. Relutrigine showed a placebo-adjusted reduction of 46% in motor seizures, with 33% of patients achieving seizure freedom. Despite these results, the market reaction was more subdued than anticipated. Needham had conducted an investor survey that suggested a potential increase of over 30% if the placebo-adjusted reduction exceeded 30%.
The tempered market response may be attributed to investor expectations surrounding upcoming data readouts for ulixa, another drug in Praxis's pipeline, expected in the second half of 2024. Investors have reportedly assigned a roughly 50% probability of success to these forthcoming data readouts.
Looking ahead, management at Praxis has initiated the registrational trial for SCN2A and SCN8A. Additionally, the EMERALD study for other developmental and epileptic encephalopathies (DEEs) is set to commence following regulatory agency input in early 2025. With the encouraging Phase 2 data in hand, Needham has increased the probability of success for relutrigine from 10% to 15%, which contributed to the revised $151 price target.
In other recent news, Praxis Precision Medicines has reported positive results from its Phase 2 study of Relutrigine, a drug targeted at treating developmental and epileptic encephalopathies (DEEs). The study demonstrated a significant 46% reduction in monthly motor seizures, exceeding expectations set by industry leaders. Over 30% of patients achieved complete freedom from seizures, marking a significant success for the treatment.
Investment firms such as Oppenheimer, TD Cowen, Guggenheim, and Truist Securities have maintained positive ratings on Praxis Precision Medicines, reflecting confidence in the company's progress. Oppenheimer notably raised its price target for Praxis to $143 based on these results.
Further clinical trials are planned, with upcoming interim Essential3 Part1 analysis expected in the fourth quarter of 2024, and the anticipated release of the relutrigine EMBOLD data in the third quarter of 2024.
InvestingPro Insights
Praxis Precision Medicines Inc. (NASDAQ: PRAX) has been a focal point for investors after Needham's recent price target update. To complement the analysis, InvestingPro insights reveal a few key metrics and tips. With a market capitalization of approximately $983.39 million, Praxis holds more cash than debt on its balance sheet, which can be a positive sign for financial stability. Analysts have revised their earnings upwards for the upcoming period, indicating potential optimism in the company's future performance despite expectations of a sales decline in the current year.
InvestingPro data shows that the company's stock price has seen a significant return over the last week, with an 8.46% increase. Over the last year, the return was even more impressive at 135.16%. However, the company is trading at a high revenue valuation multiple, and analysts do not anticipate the company will be profitable this year. These insights, paired with the latest positive study results for relutrigine, could be valuable for investors considering Praxis's potential growth trajectory.
For those seeking more in-depth analysis, there are additional InvestingPro Tips available on Praxis, providing a comprehensive view of the company's financial health and market performance.
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