On Thursday, H.C. Wainwright showed confidence in Kymera Therapeutics (NASDAQ:KYMR), raising the stock's price target to $60 from the previous $46 while maintaining a Buy rating. The firm's optimism stems from Sanofi (NASDAQ: )'s decision to broaden the scope of Phase 2 trials for Hidradenitis Suppurativa (HS) and Atopic Dermatitis (AD), potentially to test additional doses. This expansion is seen as a positive development for Kymera, given the complexities associated with trial designs for AD and HS.
The decision to extend the trials is based on the challenges inherent to AD and HS studies, such as biological variability, which is a significant limiting factor. The design of these trials is crucial for the success of disease-modifying drugs like Kymera's KT-474. Biomarker profiles are expected to play a vital role in predicting the outcome of these trials, particularly those related to IL-1R and TLR pathways in the context of KT-474.
KT-474 has shown promising results, with considerable reductions in several inflammatory cytokines, notably IL1B, CXCL8, CXCL13, and IFNG. The impact on these biomarkers correlated well with clinical outcomes, such as the HiSCR50 and the mean percentage change in average pain for HS. These results likely influenced Sanofi's decision to expand the trial.
The firm also noted that the trial faces challenges such as the need for longer time points to observe biological effects, placebo effects from topical corticosteroids, and potential underdosing. The updated trial design is anticipated to address these issues, providing further insights into the KT-474 program.
H.C. Wainwright's analysis concludes that Sanofi's move to expand the trial reduces the risk associated with the KT-474 program. Consequently, the firm has increased the probability of success (PoS) for KT-474 from 35% to 45%, leading to the elevated price target of $60. This adjustment reflects the firm's belief in the potential success and impact of the ongoing trials on Kymera's prospects.
In other recent news, Kymera Therapeutics has seen a series of updates in its drug development programs. Analysts at B.Riley have raised the price target for Kymera shares to $36.00, following the announcement of Sanofi's plans to expedite the development of drug KT-474. The expansion of ongoing Phase II studies is expected to accelerate the drug's development process.
Sanofi's decision to fast-track the development of KT-474 has led to an increase in investor sentiment, particularly towards Kymera's STAT6 degrader, informally referred to as "Dupi in a pill." Additionally, Kymera has reported promising Phase 1 results for its cancer treatment candidate, KT-333, indicating antitumor activity in several hematological malignancies.
Analysts from firms such as TD Cowen, Piper Sandler, and H.C. Wainwright have maintained positive ratings on Kymera, while BofA Securities revised its price target, maintaining a neutral stance. Furthermore, Kymera is planning to initiate Phase I clinical trials for its drug candidates, KT-621 and KT-294, in 2024 and 2025 respectively.
The company concluded the first quarter of 2024 with a robust cash balance of $745 million, projected to fund its operations into the first half of 2027.
