Guggenheim on Tuesday raised its one-year price target for PepGen Inc. (NASDAQ:PEPG) to $7.00 from $6.00 and maintained a Buy rating on the equity. The revised target represents modest upside from PepGen's then-current share price of $6.79 and follows recent strength in the stock; market capitalization stood at $466.8 million and the shares delivered an 18.5% return in the prior week.
The broker emphasized the upcoming clinical data from the FREEDOM2 5 mg/kg multiple ascending dose (MAD) cohort, expected in March and arriving just ahead of the company's next quarterly earnings report scheduled for March 19. Guggenheim's analysis of the FREEDOM2 outlook underpins its adjustment of the price target.
Scenario-based outlook
Guggenheim set out a base case and a best case tied to the FREEDOM2 readout. In the base case, the firm models a spinal involvement (SI) correction in the high-teens and an improvement in vHOT of at least 2 seconds. Under those assumptions, Guggenheim estimates PepGen's shares could rise roughly 50% to 70% from current levels.
In the best case, the firm envisions an SI change approaching the mid-20% range, a clean safety profile and an improvement in vHOT of 2.5 seconds or more. If that outcome materializes, Guggenheim projects potential upside of 70% to 100% from then-current prices and notes a therapeutic window that could allow PepGen to advance relative to competitors.
Analysts' price targets for PEPG currently span a wide range from $3 to $20, reflecting divergent views in the sell-side community about the company's prospects.
Rationale for optimism
Guggenheim highlighted a mechanistic reason the 5 mg/kg MAD cohort might deliver encouraging results: the cohort could mirror the exposure achieved with a single 10 mg/kg dose given an approximately 2x accumulation of drug in muscle and the likely absence of receptor-mediated saturation. That pharmacokinetic reasoning informs the firm’s base and upside scenarios and supported the move from a $6 to a $7 target.
Business developments
Separately, PepGen named Joseph Vittiglio as Chief Business and Legal Officer. Vittiglio brings over two decades of executive experience to the company and previously held a comparable role at bluebird bio, where he was involved in the approval and launch of three gene therapy products in the United States. He also played a role in financings totaling more than $400 million during his tenure at bluebird bio. PepGen described the appointment as part of its ongoing efforts to strengthen its executive team while pursuing strategic objectives and clinical advancement.
What this means for investors
Guggenheim's upgrade in the context of an imminent clinical data point may focus investor attention on the FREEDOM2 readout and the March earnings date. The firm’s scenario analysis frames potential outcomes for shares based on efficacy and safety metrics reported from the trial.
Note: PepGen is developing therapies for severe neuromuscular and neurological diseases using its Enhanced Delivery Oligonucleotide platform.