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Lexeo Therapeutics ‘ stock could nearly double as its gene therapies advance through its pipeline, according to JPMorgan. The bank initiated coverage of the clinical-stage biotech with an overweight rating, setting a December 2024 price target of $20. That implies a potential upside of nearly 82% from the stock’s Monday closing price of $11. Shares have been fairly rangebound since the company’s initial public offering at $11 a share earlier in November. LXEO ALL mountain Lexeo Therapeutics all-time stock chart Analyst Tessa Romero cited Lexeo Therapeutics’ lead cardiac therapy, LX2006, as a catalyst for the stock. The gene therapy is delivered to body tissues through an adeno-associated virus vector and it targets a rare genetic heart disorder called Friedreich’s ataxia cardiomyopathy. Data from the gene therapy’s phase 1/2 trial is expected by the middle of 2024. “We see Lexeo’s platform of gene therapy candidates offering a differentiated approach to target genetically driven diseases (i.e., treat the underlying genetic driver) for which there remain limited treatment options and substantial unmet needs,” Romero wrote. She added that around 5,000 patients are currently impaired by this disease in the U.S. Within patients suffering from Friedreich’s ataxia cardiomyopathy, cardiovascular disease is the cause of death in around 70% of all cases. But no treatment options have yet been introduced to treat this associated cardiomyopathy. “To this end, LX2006 is designed to promote the expression of the protein frataxin by delivering a functional frataxin (FXN) gene to restore normal mitochondrial function and energy production in myocardial cells,” Romero added. “Hence, we see the potential for LX2006 to impact/restore cardiac function and reverse disease abnormalities.” The firm is also evaluating a similar type of gene therapy, LX2020, to treat cases of PKP2-ACM, another kind of inherited heart disease. In the U.S. alone, there are around 60,000 patients with this disease. Enrollment of a low-dose cohort for LX2020 is anticipated to start in the first half of next year, with preliminary phase 1/2 data released sometime in the latter half, Romero wrote. Around that time, the firm will also be waiting for interim data from a phase 1/2 trial for LX1001, which targets patients with Alzheimer’s. The analyst said the opportunity for LX1001 has not been baked into her price target, meaning that the success of the gene therapy could provide further upside for the stock. “We currently value the potential of cardiovascular candidates – LX2006 and LX2020 – at varying degrees of substantial risk adjustment given their early stages (20% and 10%, respectively),” she wrote. “Net-net, with continued de-risking of the candidates/approach expected over the next ~6-12 months, and with its market cap in the ~$250-300M range, we see the potential for upside to LXEO’s current valuation.” — CNBC’s Michael Bloom contributed to this report.
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