On Tuesday, RBC Capital Markets adjusted its outlook on shares of Adverum Biotechnologies (NASDAQ:ADVM), decreasing the price target to $10.00 from the previous $12.00, while maintaining a Sector Perform rating on the stock.
The revision follows Adverum's third-quarter 2024 earnings report and the announcement of updated timelines for its forthcoming LUNA trial results and long-term follow-up data from its OPTIC study.
Adverum Biotechnologies, a gene therapy company focused on ocular diseases, reported that it now expects to release 52-week results from its LUNA trial in the fourth quarter of 2024. This is a shift from the initial plan to conduct a landmark analysis in the first quarter of 2025. Moreover, the company plans to share four years of follow-up data from its OPTIC trial within the same timeframe.
The company's wet age-related macular degeneration (wAMD) pivotal study is scheduled to commence in the first half of 2025, and Adverum is set to provide an update on the trial design this quarter.
The recent data suggests that reducing the dose and increasing steroid exposure could improve the therapeutic index. However, the analyst noted caution due to previous instances of clinically relevant inflammation and hypotony in the DME space and late inflammation in the OPTIC study.
The competitive landscape was also highlighted as a factor in the price target revision, with competition both within the class, from FDMT, and from outside the class, with long-acting TKIs. The analyst indicated that further de-risking is awaited before taking a more definitive stance on Adverum's prospects. The lowered price target from $12 to $10 reflects these considerations and the recent quarterly update.
In other recent news, Adverum Biotechnologies has seen several significant developments. The company reported robust second-quarter financial results for 2024, with earnings per share of ($0.89) surpassing both firm and consensus estimates. Adverum has also appointed Jason L. Mitchell as its new Chief Commercial Officer, a move expected to bolster the launch and commercialization of its gene therapy candidate, Ixo-vec.
Analysts from Oppenheimer, Mizuho (NYSE:MFG) Securities, and Truist Securities have maintained positive ratings on Adverum, with some adjustments to their price targets. Oppenheimer sustained its Outperform rating with a $28.00 price target, while Mizuho Securities reduced its target to $20.00, and Truist Securities revised its target from $60.00 to $40.00.
Adverum's Ixo-vec has received the Regenerative Medicine Advanced Therapy (RMAT) designation by the U.S. Food and Drug Administration. This recognition, coupled with the anticipation of the LUNA 52-week data release scheduled for the fourth quarter of 2024, suggests promising prospects for the firm. Furthermore, Adverum is preparing for the pivotal phase of its program, with the Phase 3 design expected to begin in the first half of 2025.
InvestingPro Insights
Recent InvestingPro data provides additional context to Adverum Biotechnologies' financial situation and market performance. The company's market capitalization stands at $156.84 million, reflecting its current valuation in the biotech sector. Despite the recent price target reduction by RBC Capital Markets, InvestingPro Tips highlight that Adverum holds more cash than debt on its balance sheet, which could be crucial for funding its ongoing clinical trials and research activities.
The company's financial health is mixed, with liquid assets exceeding short-term obligations, providing some financial flexibility. However, an InvestingPro Tip notes that Adverum is quickly burning through cash, which aligns with the typical profile of biotech companies in the development stage. This cash burn rate is particularly relevant given the extended timelines for the LUNA trial results and OPTIC study data announced in the earnings report.
Investors should note that Adverum is not currently profitable, with a negative P/E ratio of -1.57 over the last twelve months as of Q2 2024. This is consistent with the company's focus on research and development rather than immediate revenue generation. The InvestingPro Fair Value suggests a potential upside at $9.81, which is interestingly close to the new RBC Capital Markets price target of $10.
For those seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Adverum Biotechnologies, providing a deeper dive into the company's financial health and market position.
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