On Wednesday, Citi initiated coverage on Crinetics Pharmaceuticals (NASDAQ:CRNX) with a Buy rating and a price target of $68. The firm highlighted the biotech company's promising year ahead, driven by key developments in its drug pipeline.
Crinetics' lead candidate, paltusotine, is undergoing its second Phase 3 clinical trial for acromegaly, with results expected this month. The success of the initial Phase 3 study has significantly reduced the investment risk, according to Citi.
The upcoming readout from the second Phase 3 trial, termed PATHFNDR-2, could further support the use of paltusotine for a broader acromegaly patient population, including first-line and maintenance therapy.
Citi's analyst pointed out that positive results from this trial could enhance the drug's commercial potential. The first Phase 3 study, PATHFNDR-1, has already laid a strong foundation for paltusotine's approval as a maintenance therapy for acromegaly, with a potential market launch in 2025.
In addition to acromegaly, Crinetics is exploring the use of paltusotine for treating carcinoid syndrome (CS), a condition that could greatly expand the drug's market. Initial data for CS has been competitive, and a detailed update is expected in the first half of 2024. Should paltusotine be approved for CS, it could achieve blockbuster drug status, which is typically defined by reaching or exceeding $1 billion in annual sales.
Citi also noted the low expectations surrounding another Crinetics compound, CRN04894. Any positive updates in the first half of 2024 could positively impact the company's valuation, as current projections are conservative. In anticipation of these potential developments, Citi has opened an upside catalyst watch on Crinetics shares, signaling the firm's expectation of a positive shift in the stock's performance.
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