Why Are Analysts Buying Small-Cap, Recently-Public MyoKardia?

• Over the past few days, analysts at Credit Suisse and Wedbush initiated coverage on shares of Myokardia Inc MYOK, a small-cap clinical-stage biopharmaceutical company that went public less than a month ago.
• Both research firms issued Outperform ratings on the stock, and expect plenty of upside.
• So, let’s take a look at the main elements driving their bullish thesis.

Wedbush

Wedbush seemed to be the most optimistic on Myokardia, having issued an Outperform rating and $22 price target on its stock. The firm’s experts noted that the company “has a proprietary translational research platform for the development of targeted therapies for cardiovascular (CV) disease, which has typically been treated by a ‘one-size fits all’ approach.”

While developing drugs to treat CV brings many challenges, the analysts shared their view that Myokardia’s approach, which places its focus on rare genetically-driven cardiomyopathies greatly reduces its risks, and should help it better navigate the approval waters.

The company has some particularly promising prospects in the hypertrophic

cardiomyopathy (HCM) field. If approved, its lead candidate MYK461 would stand as the only disease-modifying therapy available for this condition.

Moreover, they continued, Myokardia’s strategic collaboration with Sanofi SA (ADR) SNY “provides research and financial support and leaves MYOK with substantial economics for its lead product. Sanofi has taken a ~12% equity stake in MYOK, and continued success in the clinic for ‘461 could make MYOK an acquisition target.”

Credit Suisse

Analysts at Credit Suisse also decided to award Myokardia an Outperform rating, accompanied by an $18 price target. Similar to Wedbush, the firm sees the small-cap company as one of the “leaders in developing approaches based on precision medicine for rare cardiovascular conditions, with an initial focus on the large unmet need within hypertrophic cardiomyopathy (HCM) and dilated cardiomyopathy (DCM).”

Moreover, the experts pointed out, there’s another investment positive: “the depth of science behind MYOK’s work and clear understanding of the biology behind cardiomyopathy, along with external validation provided by Sanofi collaboration, provides added comfort for a relatively early-stage asset.”

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.