Jefferies has upgraded Crinetics Pharmaceuticals (CRNX) to a "Buy" rating, maintaining a price target of $55, signaling strong confidence in the company's prospects, particularly regarding its drug atumelnant for congenital adrenal hyperplasia (CAH). The upgrade comes amidst a recent pullback in Crinetics' stock price, driven by investor concerns surrounding the final Phase 2 data for atumelnant in CAH.
Jefferies analyst Dennis Ding suggests that the market is underestimating Crinetics' potential in the CAH space, which he estimates to be a $1 billion opportunity. Despite what Jefferies considers "decent data," the analyst believes the stock price discounts much of the progress made over the last year. The firm's analysis indicates that the current stock valuation does not adequately reflect the potential of atumelnant in addressing CAH.
Atumelnant is being developed as an oral treatment option for CAH, a condition characterized by a deficiency in enzymes needed to produce cortisol. Current treatments often involve high doses of steroids, leading to significant side effects. Crinetics aims to provide a more targeted and convenient therapy with potentially fewer side effects.
Jefferies believes that atumelnant "could still be a differentiated oral option" in the treatment landscape for CAH, either before or after Crenessity, another drug in Crinetics' pipeline. This suggests that atumelnant could play a significant role in treating CAH patients, regardless of the availability of other therapies.
The upgrade reflects Jefferies' positive outlook on Crinetics' ability to address a significant unmet need in CAH treatment with atumelnant, and the analyst sees the recent stock pullback as an opportunity for investors.
