On Wednesday, Jones Trading adjusted its financial outlook on Rallybio Corp. (NASDAQ:RLYB), reducing the stock price target to $20 from the previous $30, while continuing to endorse the stock with a Buy rating.
The revision follows Rallybio's recent fourth-quarter 2023 earnings release and the company's strategic decision earlier this year to prioritize its portfolio. This move aims to extend its financial runway into mid-2026, with a particular focus on advancing RLYB212, a treatment for Fetal and Neonatal Alloimmune Thrombocytopenia (FNAIT).
Rallybio is preparing to initiate a Phase 2 study for RLYB212 in the second half of 2024. The upcoming study will include multiple dose pharmacokinetic (PK) assessments across approximately three cohorts of pregnant women at risk for FNAIT. Significantly, this study is expected to be fully funded by Rallybio's current cash reserves, which stand at $110 million.
Despite the positive outlook on the company's shares, Jones Trading notes a "catalyst shadow" over the next 12 to 18 months, with Phase 2 data not anticipated until 2025. The extended development timeline for RLYB212 and the absence of additional portfolio assets contributing to near-term growth have led to the revised price target.
Jones Trading remains optimistic about the potential of Rallybio, citing possible positive developments from natural history data or regulatory feedback on the Phase 2 study as factors that could drive future momentum for the company's stock. Still, the firm has adjusted its financial model for Rallybio to reflect the updated expectations, resulting in the lowered price target.
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