Solid Biosciences is shrugging off several messy years in gene therapy development, an analyst said Thursday as he initiated coverage of the biotech stock with an outperform rating.
Shares of Solid Bio spent two years in free fall from early 2021 to late 2023. But after bottoming out at 1.81 in October, the biotech stock has skyrocketed 687% as of Wednesday's close. On today's stock market, though, shares skidded 6.5%, closing at 13.32 and erasing premarket gains.
But William Blair analyst Tim Lugo says Solid Bio could be a fast follower in Duchenne muscular dystrophy. Sarepta Therapeutics has the only approved gene therapy on the market for the disease, which primarily affects boys and causes progressive muscle weakness.
"After initial stumbles in DMD, Solid Biosciences' new management brings significant experience in the (disease) and in gene therapy manufacturing and development," he said in a report.
The Biotech Stock's Comeback
Solid Bio has spent years trying to develop a gene therapy for Duchenne muscular dystrophy. The Food and Drug Administration put Solid Bio's study on hold in late 2019. About a year later, the agency removed the clinical hold, allowing the company to begin testing again.
Today, the gene therapy is in midstage testing. The company is enrolling patients now and Lugo expects to see initial data in the second half of the year.
Solid Bio's drug works by helping a patient's body make a miniature version of the dystrophin protein. Dystrophin keeps muscles intact, but it's missing in patients with Duchenne muscular dystrophy. In mice, Solid Bio's gene therapy led to high levels of dystrophy expression.
"Given the 100% expression viewed in several areas of the mouse model, we believe expression data should be strong, and if the safety profile is clean, we would expect this to be a catalyst for shares to spike severalfold," Lugo said.
He has an outperform rating and 40 price target on the biotech stock.
He also notes Solid Bio is working on a treatment for catecholaminergic polymorphic ventricular tachycardia, or CPVT. This inherited disorder causes sudden heart rhythm disturbances, also called arrhythmias, in healthy children.
CPVT is "a potentially even larger driver of value than DMD given the company's lead position in this deadly disease that impacts 20,000 people in the United States alone," he said. "Solid's program also holds several possibilities for fast-to-market clinical trial design."
Top 1% Performance
Today, the biotech stock has a perfect Relative Strength Rating of 99, according to IBD Digital. That means Solid Bio stock has outperformed 99% of the market over the past 12 months.
Shares also have a strong Composite Rating of 93, on a 1-99 scale of fundamental and technical measures.
Solid Bio stock has remained above its 50-day and 200-day moving averages since December, MarketSurge.com shows. But the biotech stock didn't definitively leave dollar-stock status until this month.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
