Biotech stock Scholar Rock (SRRK 2.97%) was popular among investors on Wednesday after a positive new analyst note on the company made the rounds. This resulted in the stock bumping nearly 3% higher on the day. That handily beat the S&P 500 index, which itself had a good trading session with a 1.7% advance.
Bulking up
Scholar Rock targets relatively uncommon disorders that might lack effective treatments.
Its current lead drug candidate — apitegromab, a medicine that preserves muscle mass in patients with two types of spinal muscular atrophy (SMA) — is under review for approval by both the U.S. Food and Drug Administration and the European Union’s European Medicines Agency (EMA).
Analyst Allison Bratzel of Piper Sandler feels that investors are not pricing apitegromab’s potential into Scholar Rock’s shares. According to reports, she wrote that if the drug well-received it could vault the biotech well higher in price; given that it’s notably undervalued.
Accordingly, Bratzel maintained her overweight (buy, in other words) recommendation on Scholar Rock and her $42 per share price target.
Significant potential
Although there is no cure at present for SMA, drugs that promise to treat the more uncomfortable aspects of the disorder could indeed do very well. Since apitegromab has performed admirably in clinical trials, it certainly feels as if the treatment might become a go-to in the preservation of muscle mass for SMA patients.
That said, caution is always warranted for even the best biotech companies. The approvals Scholar Rock is seeking are by no means guaranteed, and a delay or denial in its current applications could batter the stock significantly. Investors should keep a sharp eye on regulatory developments with apitegromab.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.