Morgan Stanley says this under-the-radar biotech stock can rally more than 80%

Published Tue, Aug 15 20236:35 AM EDTUpdated Tue, Aug 15 202311:08 AM EDT

Investors should look to Pharvaris for sizable gains, according to Morgan Stanley. Analyst Maxwell Skor upgraded the biotech stock to overweight from equal weight and raised his price target by $24 to $34. This forecast implies shares stand to gain 84.5% in the next 12 months. "We believe Pharvaris is positioned to deliver the first oral therapy for the on-demand treatment of hereditary angioedema (HAE) supported by positive Ph2 RAPIDe-1 data (here) and the FDA lifting their clinical hold," Skor wrote in a Tuesday note. "We see a viable market opportunity with ondemand and short-term prophylactic treatment." Pharvaris is a clinical-stage company developing B2-receptor antagonist oral therapies, such as deucrictibant, to treat and prevent hereditary angioedema attacks. Deucrictibant is the only drug of its kind currently in clinical development, according to the company. HAE, which is a rare genetic disorder that involves recurrent and severe swelling in various parts of the body, is a growing market expected to reach more than $4.5 billion in worldwide sales by 2030. The market is split between on-demand treatment and a growing prophylactic segment, according to the note. Skor thinks deucrictibant has a superior safety profile across early clinical trials to the currently dominant therapeutic for the disorder, Orladeyo. The drug "can potentially be best-in-class, capturing a sizable share of both the on-demand (~45% penetration) and prophylactic (~25% penetration) market by 2035," Skor wrote. He estimates about $840 million in adjusted peak sales for deucrictibant in 2035. The FDA's decision to lift its clinical hold of deucrictibant, for the on-demand treatment of HAE, suggests growing confidence in the safety profile of the drug, Skor said. He noted, however, that the FDA's clinical hold on prophylactic treatment remains a "key overhang" and that management is expected to submit nonclinical data by 2023. The stock has gained more than 63% this year. PHVS YTD mountain PHVS in 2023 — CNBC's Michael Bloom contributed reporting.