Wells Fargo has made a significant adjustment to its stance on Travere Therapeutics (NASDAQ: TVTX), shifting the stock's rating from Equal Weight to Overweight and setting a new price target of $27.00.
The revision reflects a more optimistic outlook on the company's prospects, particularly regarding its treatment for Focal Segmental Glomerulosclerosis (FSGS).
The firm's analyst pointed to several reasons for the upgraded rating. Firstly, there is now believed to be a greater than 50% chance of FSGS approval based on current data.
Additionally, there is a positive risk/reward scenario leading into the FSGS update expected in 2025, with potential for significant upside. The analyst also sees increased opportunity in IgA Nephropathy (IgAN) following full approval, with a broader label and new guidelines expected to boost the drug's use.
Wells Fargo has revised its valuation of Travere Therapeutics to $27 per share, acknowledging that their initial assessment of the impact of the PARASOL trial on FSGS may have been incorrect. The firm now believes the FDA might be open to accepting proteinuria benefits over 24 months as a validated surrogate endpoint, given Filspari's strong performance on urinary protein-to-creatinine ratio (UPCR).
Finally, Wells Fargo has increased its sales expectations for Filspari in IgAN to $700 million from $500 million in the US. The survey hinted at a 25% peak penetration for Filspari, but the firm remains conservative in its estimates, citing potential biases toward early adopters in the survey and uncertainties regarding combination use and payer acceptance.
In other recent news, Travere Therapeutics' drug FILSPARI has received temporary marketing authorization from Swissmedic, the Swiss regulatory authority, for the treatment of adults with primary IgA nephropathy.
This approval follows recent authorizations from the U.S. Food and Drug Administration and the European Medicines Agency. The authorization is based on the Phase 3 PROTECT Study, which demonstrated significant and meaningful results for FILSPARI, a non-immunosuppressive treatment option.
Simultaneously, Travere Therapeutics has reported substantial progress in its Focal Segmental Glomerulosclerosis (FSGS) studies. Following the outcomes of the PARASOL workgroup discussions, Wells Fargo maintains an Equal Weight rating on Travere shares. The company is also preparing to reengage with the U.S. Food and Drug Administration for potential submissions.
However, Travere has temporarily paused patient enrollment for the Phase III HARMONY study of pegtibatinase due to a technical issue during the manufacturing scale-up process. Despite the pause, the company maintains a robust financial position, with $325.4 million in cash and securities, expected to support its operations into 2028.
InvestingPro Insights
Travere Therapeutics (NASDAQ:TVTX) has shown remarkable market performance, aligning with Wells Fargo's upgraded outlook. InvestingPro data reveals a strong 212.41% price return over the past six months, reflecting growing investor confidence. The company's revenue growth is also noteworthy, with a 68.08% increase in the most recent quarter, suggesting positive momentum in line with the analyst's optimistic projections for Filspari.
InvestingPro Tips highlight that three analysts have revised their earnings upwards for the upcoming period, supporting Wells Fargo's bullish stance. Additionally, the stock is trading near its 52-week high, with the current price at 94.95% of that peak, indicating strong market sentiment.
However, it's important to note that Travere is not yet profitable, with a negative gross profit margin in the last twelve months. This aligns with the InvestingPro Tip that analysts do not anticipate the company will be profitable this year, underscoring the speculative nature of the investment despite its potential.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Travere Therapeutics, providing a deeper understanding of the company's financial health and market position.
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