SVB Leerink downgraded Rubius Therapeutics (NASDAQ:RUBY) to “market perform” from “outperform” and slashed its price target to $4 from $19 after the company discontinued development of RTX-134 for the treatment of phenylketonuria (PKU), a metabolic birth defect, and the entire rare disease pipeline.
The company now intends to focus clinical development in the areas of oncology and autoimmunity. Shares of Rubius tumbled $2.56 to close at $3.99 in heavy turnover on March 12.
“We are disappointed with this difficult decision as it yet again delays clinical proof-of-concept for the platform,” writes analyst Jonathan Chang. “This follows previous delays related to manufacturing and problems recruiting PKU patients.”
While the preclinical oncology data so far have been encouraging and the oncology opportunities are potentially significant, Mr. Chang said they are still in the early stages of development.
While the PKU opportunity was always a relatively small part of the value proposition, he said the PKU clinical efforts were important for providing initial proof-of-concept for Rubius’ red-cell therapy platform. In addition, PKU was in some ways the low-hanging
fruit from a technical perspective for demonstrating proof-of-concept data, he added.
