Medical stocks are often very profitable. Their success depends on many factors, though, such as good management and equipment, finding the right niche on the market, and offering products that are valuable and in demand.
Avidity Biosciences checks most of these boxes. It aims to provide its customers with better treatments for a wide range of serious diseases. The company is working on a new class of oligonucleotide-based therapies called antibody oligonucleotide conjugates. It thus designs AOCs with the goal to overcome the current limitations for treatment.
The company has a leading AOC platform. It is also planning to extend the benefit of RNA therapeutics beyond the liver and localized CNS delivery of category leader drug approvals.
According to preclinical data for AOCs, lower doses resulted in a 50-75% DMPK target knockdown. The firm will probably initiate the Phase 1 program for its AOC1001 asset in 2021.
Wells Fargo’s analyst Jim Birchenough thinks that when it happens, early data on target knockdown should be predictive of clinical benefit. It is a good bet, considering the clear role of DMPK in disease pathogenesis as well as lower disease burden in patients with reduced DMPK expression.
Will the company prevail over the competition?
Avidity Biosciences isn’t the only company that attempted to develop a cure. In fact, other firms have tried to make headway in the myotonic dystrophy (DM1) space as well. Biogen and Ionis Pharmaceuticals even yielded evidence of target knockdown and positive downstream effects on key splice variants in DM1 patients. Even though they achieved adequate tissue concentration, the effect was limited to only a small sample size at a very high dose.
Birchenough pointed out that Avidity Biosciences has a more positive outlook. Its clinical programs in Duschenne Muscular Dystrophy (DMD) and muscle atrophy will likely kick off in 2022. Furthermore, the company’s pipeline includes AOC candidates for genetic muscle diseases, including Pompe disease and facioscapulohumeral muscular dystrophy.
The analyst set a $60 price target. In the case of success, shareholders will gain an impressive 153%. Other experts agree with Birchenough, giving the stock a Strong Buy rating. The average price target is $43.33, with 83% upside potential.
