On Tuesday, RBC Capital Markets adjusted their financial outlook for Pliant Therapeutics (NASDAQ: PLRX), increasing the price target to $54 from the previous $50, while maintaining an Outperform rating on the company's stock.
The revision reflects a more optimistic assessment of the company's lead drug's market potential, particularly for the treatment of Idiopathic Pulmonary Fibrosis (IPF).
The firm's analysis indicates that the market opportunity for Pliant's lead drug in IPF could reach as much as $3 billion at peak sales. This figure is double the previous estimates and takes into account a conservative penetration rate in the existing patient population and its potential use in combination therapies.
The reassessment comes amid discussions on the drug's data and regulatory pathway for Primary Sclerosing Cholangitis (PSC), an indication that has dominated investor attention this year.
RBC Capital suggests that investors may have overlooked the significance of the drug's prospects in IPF, an area where it is considered somewhat de-risked and has a clear path to registration.
The firm anticipates that the upcoming 24-week PSC data, expected to be released mid-year, could further substantiate the drug's safety profile, which would be beneficial for its use in IPF as well.
The longer development timeline for IPF treatments, which may see fewer near-term catalysts, is acknowledged by RBC Capital. However, the firm believes that the substantial sales potential in the IPF market could make Pliant Therapeutics an attractive target for acquisition.
Consequently, RBC Capital has raised its long-term sales estimates for the company, reiterating their recommendation for investors to buy shares.
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