Jefferies has upgraded Kodiak Sciences Inc. (NASDAQ:KOD), a biopharmaceutical company focused on retinal (eye) diseases.
Kodiak's lead investigational medicine, tarcocimab, is an anti-VEGF antibody biopolymer conjugate under development for high-prevalence retinal vascular diseases.
Tarcocimab is currently being studied in two Phase 3 trials, GLOW2 in diabetic retinopathy and DAYBREAK in patients with wet age-related macular degeneration (wet AMD). Both studies are actively enrolling patients.
Jefferies upgraded Kodiak Sciences from Hold to Buy. The analyst writes that Kodiak Sciences is gaining investor interest as it enters a pivotal phase.
The company's turnaround story for 2025 looks promising, with Phase 3 trials in wet AMD progressing well and showing strong potential.
Adding to the excitement, upcoming VEGF/IL-6 data for macular edema secondary to inflammation (MESI) (inflammation) could open doors to new indications, enhancing its growth prospects.
Jefferies writes that at $7 per share and a $400 million market cap, the stock appears undervalued. As Phase 3 results approach, analysts project it could climb to $20 or a $1 billion+ market cap. There's significant upside potential from here.
The stock is gaining momentum but remains relatively undervalued with a ~$400 million market cap and $200 million enterprise value. Key points driving optimism include:
- Upcoming Phase IB Data: Positive results from the Phase IB trial in MESI are expected to boost the stock and reduce risks associated with KSI-101. The drug is also on track for Phase II/III trials.
- Investor Interest: Given the attractive valuation, healthcare funds are showing strong interest. The company has indicated plans for potential financing in 2025, which could strengthen its balance sheet and attract more capital from prominent healthcare investors.
- Phase 3 Trials: Two Phase 3 studies for tarcocimab targeting wet AMD and diabetic retinopathy are set to be completed by the first half of 2026, adding more catalysts over the next 12-18 months.
With these developments, the stock has multiple drivers for growth and potential upside.
Kodiak ended the third quarter of 2024 with $197.9 million of cash and cash equivalents, expected to support current and planned operations into 2026.
Price Action: KOD stock is up 28.4% at $10.05 at last check Monday.
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