On Wednesday, Larimar Therapeutics (NASDAQ:LRMR) received a Buy rating from Jones Trading, with a set price target of $14.00. The firm expressed optimism about Larimar's primary product, nomlabofusp, which is currently in Phase 2 trials for treating Friedreich's Ataxia (FA), a rare genetic disease.
The recent approval of Biogen (NASDAQ:BIIB)'s Skyclarys has not dampened Jones Trading's perspective on the FA market, which they see as still having significant unmet needs. The firm believes that there is a reasonable likelihood that nomlabofusp will successfully reach the market, although they note that the potential for accelerated approval is still an open question.
Jones Trading forecasts that nomlabofusp could reach $1.3 billion in peak unadjusted sales by 2031, with a probability-adjusted forecast of $600 million. Their positive outlook is further supported by expectations of Phase 2 open label extension data becoming available in the fourth quarter of 2024 and throughout 2025, with a Biologics License Application (BLA) submission anticipated in the second half of 2025.
The coverage initiation and the positive outlook on Larimar Therapeutics' lead asset reflect Jones Trading's confidence in the company's prospects within the FA treatment landscape. The price target of $14.00 suggests a significant upside from the current trading levels of Larimar's stock.
In other recent news, Baird initiated coverage on Larimar Therapeutics, assigning an Outperform rating. This decision follows the U.S. Food and Drug Administration's inclusion of Larimar's lead drug candidate, nomlabofusp, in its START pilot program, designed to expedite the development and review of drugs treating serious conditions. Baird's optimism stems from the potential U.S. approval of nomlabofusp for treating Friedreich's ataxia, a rare genetic disease.
The analyst highlighted a 60% probability of the drug gaining approval, potentially with accelerated approval by 2026. Nomlabofusp is recognized for its unique mechanism of action that directly targets the underlying cause of Friedreich's ataxia, a deficiency of the protein frataxin. The Baird analyst expressed confidence in the drug's ability to capture a significant market share, even in a competitive landscape.
InvestingPro Insights
In light of Jones Trading's optimistic outlook on Larimar Therapeutics, it's worth considering some additional perspectives provided by InvestingPro. Notably, Larimar holds more cash than debt on its balance sheet, which is a positive sign for financial stability and potential growth. Additionally, the company's liquid assets exceed its short-term obligations, suggesting a healthy liquidity position that could support ongoing clinical trials and operations.
However, it's important for investors to be aware of certain challenges. Analysts have revised their earnings expectations downwards for the upcoming period, and the company is not expected to be profitable this year. Moreover, Larimar has been grappling with weak gross profit margins, and net income is anticipated to drop. These factors could impact the company's ability to reach Jones Trading's sales forecasts for nomlabofusp.
From a market performance standpoint, Larimar has experienced a high return over the last year, with a year-to-date price total return of 73.41%, and an even more impressive 106.54% return over the last twelve months. Nevertheless, the company does not pay a dividend to shareholders, which may influence the investment strategy for income-focused investors.
For those seeking deeper insights, there are additional InvestingPro Tips available on Larimar Therapeutics at https://www.investing.com/pro/LRMR. These tips could provide further guidance on the company's financial health and market potential.
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