Evercore ISI Initiates Coverage of Aclaris Therapeutics, Sees Potential for Significant Stock Gain

Aclaris Therapeutics, a clinical stage biotech company focused on immunology and inflammation drugs, has been initiated with an “outperform” rating by Evercore ISI. The analysts believe that the market is currently undervaluing the company’s prospects for success, especially with the upcoming release of clinical trial data.

According to analyst Gavin Clark-Gartner, Aclaris Therapeutics has a potential to see a significant stock gain of over 300% if the trial data turns out to be positive. However, there is also a potential downside risk of a 67% drop if the data is negative. Despite this risk, the analyst believes that investors have been overly fixated on the company’s lead drug candidate, zunsemetinib, and are not taking into account the value of other compounds in its drug pipeline.

Evercore ISI also believes that investors may be too pessimistic about the likelihood of success for zunsemetinib. While admitting that the trial results could be unsuccessful, the analyst points out that the company’s diversified pipeline provides a safety net for investors. The analysts see this as a favorable setup for potential gains.

Aclaris Therapeutics has experienced a decline of nearly 60% in its share price this year, resulting in a market capitalization of $480 million. One setback for the company was the failure of zunsemetinib to meet its goals in a phase 2a trial for a skin disease called hidradenitis suppurativa. However, the drug is now being studied for rheumatoid arthritis, with phase 2b results expected by the end of the year, and psoriatic arthritis, with results expected in the first half of 2024.

If Aclaris Therapeutics achieves success with zunsemetinib, it will be the only MK2 inhibitor on the market for rheumatoid arthritis, giving the company a competitive advantage. Evercore ISI believes that investors are currently only pricing in a 20% chance of positive trial data, while the firm’s analysts estimate the odds to be closer to 50%.

Source: CNBC’s Michael Bloom contributed to this report.