On Wednesday, Goldman Sachs maintained a Buy rating on Avidity Biosciences (NASDAQ:RNA) with a steady price target of $59.00. The firm's focus is on the company's commercial execution as it prepares for the upcoming launch of its major depressive disorder (MDD) treatment. Avidity reported third-quarter 2024 revenues of $175.4 million, a slight increase from the FactSet consensus of $172.3 million and in line with Goldman Sachs's estimate of $175.2 million. Additionally, the company adjusted its full-year revenue guidance for fiscal year 2024 to a range of $665-685 million, up from the previous forecast of $650-680 million.
Avidity Biosciences has expanded its sales force by 150 representatives in the third quarter of 2024, aligning with expectations and aiming to broaden its reach among primary care physicians. This move is to support the bipolar depression (BPD) opportunity. The company has also set a target for Caplyta, its treatment for BPD and MDD, projecting over $5 billion in sales over the next decade. This estimate surpasses Goldman Sachs's earlier projection of $3.3 billion in the U.S. and is higher than the peak sales estimates for Vraylar, which are expected to reach $4.7 billion by 2028 according to Visible Alpha.
Goldman Sachs anticipates that Avidity will transition to profitability by 2026 at the earliest, considering the consistent revenue growth versus the expenses incurred in preparation for the MDD launch. The company has plans to file a supplemental New Drug Application (sNDA) for MDD by the end of 2024. The commercial potential for Caplyta within the MDD market is a focal point for investors, with Goldman Sachs estimating peak risk-unadjusted sales of $1.6 billion, up from the previous $1.3 billion estimate.
The company's stock experienced a significant uptick, trading up 12% on Wednesday, outperforming the XBI index which remained unchanged. This surge is attributed to the optimistic sales forecast for Caplyta. In light of these developments, Goldman Sachs has reiterated a Neutral rating and increased the 12-month price target for Avidity Biosciences to $79 from the previous target of $74. This adjustment reflects an anticipated rise in near-term operational expenses balanced by the higher expected peak sales for Caplyta.
In other recent news, Avidity Biosciences has made significant strides in its clinical trials. The biopharmaceutical company has initiated a biomarker cohort for its Phase 1/2 FORTITUDE trial, evaluating delpacibart braxlosiran in individuals with facioscapulohumeral muscular dystrophy. The U.S. Food and Drug Administration (FDA) also lifted the partial clinical hold on Avidity's drug candidate, del-desiran, allowing the continuation of the Phase 3 HARBOR trial.
Avidity Biosciences has additionally announced a $250 million public offering of common stock, managed by Leerink Partners and TD Cowen, to support its clinical programs and advance its research and development. Goldman Sachs and TD Cowen have reiterated their Buy rating on Avidity's stock, emphasizing the potential of its drugs del-brax and del-desiran, with projected peak sales of $2.7 billion and $4.0 billion, respectively.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Avidity Biosciences' financial position and market performance. The company's market capitalization stands at $5.07 billion, reflecting investor confidence in its potential. Despite the optimistic outlook presented in the article, it's important to note that Avidity Biosciences is currently not profitable, with a negative P/E ratio of -20.05 over the last twelve months as of Q2 2024.
However, aligning with Goldman Sachs' positive stance, InvestingPro Tips highlight that Avidity Biosciences holds more cash than debt on its balance sheet, indicating a strong liquidity position. This financial cushion could be crucial as the company prepares for the launch of its MDD treatment and expands its sales force.
The company's stock has shown remarkable performance, with a 775.64% price total return over the past year. This aligns with the article's mention of the recent 12% stock surge and outperformance of the XBI index.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Avidity Biosciences, providing a deeper understanding of the company's financial health and market position.
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