Scholar Rock Is A Potential M&A Target, Its Exploration of Obesity Market Garners Interest: Analyst

Mar 28, 202418:42 UTC

Raymond James has initiated coverage on Scholar Rock Holding SRRK, supported by the potential value with a couple of key programs utilizing selective myostatin inhibition to preserve muscle loss.

The analysis focuses on the potential of their lead program, apitegromab, for Spinal Muscular Atrophy (SMA), which is currently in a Phase 3 trial (SAPPHIRE) with data expected in Q4 2024.

Apitegromab benefits from robust Phase 2 data (TOPAZ) and shows promise as an add-on therapy to existing treatments for SMA.

The analyst commences coverage of Scholar Rock with a Strong Buy rating and a price target of $30.

Additionally, Scholar Rock is exploring opportunities in the obesity market with SRK-439, a next-generation myostatin inhibitor, which has shown positive preclinical data in preserving lean muscle mass alongside GLP-1s for weight loss.

These data showed that SRK-439 maintained lean mass and improved fat mass loss when combined with a GLP-1 receptor agonist (GLP-1 RA; in separate experiments with Novo Nordisk A/S’s NVO semaglutide and liraglutide.

SRK-439 treatment also led to incremental lowering of fasting glucose beyond the levels seen with semaglutide alone.

A proof-of-concept trial for apitegromab in obesity will start in mid-2024, with results expected in mid-2025, coinciding with the IND filing for SRK-439.

The company also has other promising candidates, like SRK-181 targeting latent TGFβ1 in solid tumors, which has shown encouraging results in early trials.

Scholar Rock’s valuation appears attractive, considering its pipeline opportunities and favorable risk/reward profile. Given their relevance in sizable markets, the company’s treatments could be appealing for acquisition.

The company ended 2023 with approximately $280 million in cash, cash equivalents, and marketable securities, which is expected to fund operations into 2H 2025.

Price Action: SRRK shares are up 15.50% at $17.19 on the last check Thursday.

Photo via Shutterstock