Rocket Pharmaceuticals (RCKT) stock rallied 29% on Wednesday as the U.S. Food and Drug Administration (FDA) lifted the clinical hold on the biotechnology company’s pivotal Phase 2 trial of RP-A501 for the treatment of Danon disease, a genetic disorder. Bank of America upgraded RCKT stock to Buy from Hold and raised the price target to $10 from $4, calling the news a positive surprise, as the company’s restructuring had suggested the process of getting the hold lifted would be “lengthy.”
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The FDA halted the trial in May after a patient died from a rare complication. The regulatory body confirmed that Rocket satisfactorily addressed issues outlined in the clinical hold. The trial will be resumed with a revised pre-treatment regimen and a lower dose of the gene therapy.
Bank of America Turns Bullish on RCKT Stock
Bank of America analyst Jason Zemansky stated that most believed that the lifting of the hold status was a matter of “if” rather than “when,” given that the fatality was reportedly due to the safety protocol and not the gene therapy.
Beyond the A501 trial, the 4-star analyst contends that RCKT stock has not been seeing much movement due to negative readthroughs related to other assets and concerns about the class after a series of setbacks.
Zemansky acknowledged that the FDA’s lifting of the clinical hold on the trial might not completely address all the ongoing concerns, with work still ahead for A501, and investor sentiment generally slow to reverse. That said, the analyst believes that RCKT stock looks compelling at current levels, given that the Danon disease trial is restarting, strong A501 data so far, and a “seemingly open FDA.” Additionally, Zemansky increased his view on the odds of success for A501 to 50% from 15%, while maintaining its “more conservative” 2028 launch assumption.
Is RCKT Stock a Good Buy?
Overall, Wall Street has a Moderate Buy consensus rating on Rocket Pharmaceuticals stock based on nine Buys, seven Holds, and one Sell recommendation. The average RCKT stock price target of $8.71 indicates 132.3% upside potential.
