Hold Rating for Rocket Pharmaceuticals Amid Safety Concerns and Financial Uncertainties

Rocket Pharmaceuticals (RCKT – Research Report), the Healthcare sector company, was revisited by a Wall Street analyst today. Analyst Andrew Tsai from Jefferies downgraded the rating on the stock to a Hold and gave it a $2.50 price target.

Andrew Tsai has given his Hold rating due to a combination of factors surrounding Rocket Pharmaceuticals’ RP-A501 program for Danon heart disease. The recent FDA clinical hold on the pivotal Phase II trial has introduced uncertainties regarding the drug’s benefit-risk profile, primarily due to safety concerns such as a patient death and capillary leak syndrome. These issues have led to a downgrade from a previous Buy rating, as the timeline for resolving these concerns and obtaining pivotal data has been pushed back.
Additionally, the company’s financial position, with a cash runway projected to last until 2027, relies heavily on the potential receipt of priority review vouchers from other programs. This financial dependency adds another layer of uncertainty. While there is potential for the drug to eventually gain approval, the lack of immediate catalysts and the need for more data to confirm the safety and efficacy of RP-A501 contribute to the Hold rating. The situation will be reassessed if management can address these challenges effectively in the coming years.

Based on the recent corporate insider activity of 39 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of RCKT in relation to earlier this year.