On Tuesday, Longboard Pharmaceuticals Inc (NASDAQ: LBPH) saw its price target increased by a Citi analyst from $40.00 to $45.00, while the firm maintained a Buy rating on the stock. This adjustment follows a key regulatory development for the company's drug candidate, bexicaserin.
The company recently announced that it had been granted Breakthrough Therapy Designation (BTD) by the U.S. Food and Drug Administration (FDA) for bexicaserin in treating developmental and epileptic encephalopathies (DEE) in patients aged two years and older. The FDA has also agreed to a Phase 3 basket study approach, which is expected to support a broad label if successful.
Management at Longboard Pharmaceuticals has expressed confidence in disclosing the BTD status and confirmed the FDA’s endorsement of their proposed Phase 3 study plans. However, further details regarding the Phase 3 trials, such as enrollment targets and powering assumptions, will be shared after the formal meeting minutes are received.
The planned Phase 3 trials will focus on different patient subsets, with the first trial targeting Dravet syndrome patients and the second trial encompassing Lennox-Gastaut syndrome (LGS) and other DEE subtypes.
The FDA's green light for these trials has led the Citi analyst to adjust the probability of success in their model from 55% to 65%, in alignment with the probabilities for Dravet and LGS. This change underpins the new price target of $45.
Longboard Pharmaceuticals' bexicaserin aims to address a group of over 20 rare epilepsy syndromes included under the DEE label. With the current worldwide peak sales estimate for bexicaserin at approximately $1.6 billion, which is not adjusted for risk, the analyst suggests that this figure could be conservative given the broad potential market for the drug.
In other recent news, Longboard Pharmaceuticals has been making notable strides in the biopharmaceutical field. The company recently announced encouraging initial results from the PACIFIC OLE study, which assesses the potential of bexicaserin in treating various developmental and epileptic encephalopathies.
A key End-of-Phase 2 meeting with the U.S. Food and Drug Administration is slated for the upcoming summer, with the Phase 3 program expected to commence in the second half of 2024.
Citi reaffirmed its Buy rating for Longboard Pharmaceuticals, maintaining its confidence in the company's progress. Analyst firms H.C. Wainwright & Co and Cantor Fitzgerald also maintain a bullish stance on Longboard, with both firms setting a price target of $60. In addition, Baird initiated coverage with an Outperform rating and a price target of $36.00.
These recent developments underscore Longboard's potential to address significant unmet needs in epilepsy treatment and its potential to establish bexicaserin as a best-in-class therapy. Furthermore, the company anticipates Phase 1 data for another therapeutic candidate, LP659, in the second quarter of 2024.
InvestingPro Insights
Longboard Pharmaceuticals Inc (NASDAQ: LBPH) has recently been the subject of heightened investor interest following its regulatory advancements. According to InvestingPro data, the company boasts a market capitalization of $1.22 billion, reflecting significant investor confidence. Notably, the stock has delivered impressive returns, with a 52.02% increase over the last week and a staggering 321.25% over the past year, indicating a robust upward trajectory.
Two InvestingPro Tips highlight the financial health and market sentiment surrounding Longboard Pharmaceuticals. Firstly, the company holds a stronger cash position than debt, suggesting a stable financial footing. Secondly, the stock is currently trading near its 52-week high, which could imply that it is in overbought territory according to the Relative Strength Index (RSI). This might warrant caution among investors considering entry points.
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