It may be time for investors to jump into little-known biotech stock Fulcrum Therapeutics , according to Goldman Sachs. Analyst Madhu Kumar initiated coverage of the stock as a buy with a price target of $11, which presents an upside of 61.5% from Monday’s close. The stock was up 4.4% in trading Tuesday, but has lost 59.2% since the start of 2022. Fulcrum is a biotechnology company focused on developing drugs for rare genetic diseases like sickle cell. Its leading asset is a drug for a type of facioscapulohumeral muscular dystrophy, which is expected to have enrollment completed for its pivotal phase three trial in 2023. Called FSHD, it’s a common type of muscular dystrophy that focuses on the face, shoulder blades and upper arms. About 870,000 people worldwide have it, according to the FSHD Society . Kumar said he is “reasonably positive” given the safety and efficacy results from the second phase. “We believe p38α/β MAPK inhibitor losmapimod has the potential to be a novel first-in-class therapy in FSHD,” Kumar said in a note to clients. Kumar said Fulcrum has a significant clinical lead over competitors such as Arrowhead Pharmaceuticals in creating a therapy for FSHD. However, he noted that changes to timeline, regulatory approval or expected performance for any of Fulcrum’s main drugs would hurt the stock. He has assumed a 40% probability of success and 40% peak market share for the FSHD drug. The company has other drugs in early stages, with one notable project focused on sickle cell disease that is in phase 1B. About 5% of the world’s population carries the trait for hemoglobin disorders like sickle cell disease, according to the World Health Organization . Kumar said its FTX-6058 experimental drug for sickle cell disease, which is called SCD in short, has been promising in early testing. He is watching for the clinical development pipeline to expand in 2023 with an Investigational New Drug Application through the Food and Drug Administration. “Overall, we are encouraged by the possibility of losmapimod and FTX-6058 to unlock value in the FSHD and SCD spaces, respectively,” he said. — CNBC’s Michael Bloom contributed to this report.
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