Korro Bio, Inc. $KRRO Price Prediction $90
Korro leverages its novel RNA editing platform to correct pathogenic mutations at the mRNA level or create de novo proteins with desired/therapeutic functionality. Korro's lead program targets AATD, an attractive commercial opportunity as reflected by the ~$15B value lost from VRTX when it announced failure of its AATD trial. Unlike most AATD investigational treatments, Korro's differentiated RNA editing approach targets both the liver and lung manifestation, and could potentially deliver a best-in-disease profile. We see KRRO as a leader in RNA editing and await the first clinical data in mid-2025/2H25.
Korro has built a very promising, novel RNA editing platform. Korro's platform is leveraging a natural protein (ADAR) to edit a single nucleotide on mRNA, aiming to correct pathogenic mutations or to create de novo proteins with desired/therapeutic functionality. Although RNA editing isn't clinically derisked, Korro's platform appears very promising and Korro is one of the leaders in the RNA editing space.
Korro's lead program (KRRO-110) aims to treat AATD, key catalysts include KRRO-110 CTA/IND approval in 2H24 and competitor data in ~2H24/1H25. AATD(alpha-1-antitrypsin deficiency) is caused by a single-nucleotide mutation that Korro aims to correct at the mRNA level, leveraging its RNA editing platform. We believe KRRO-110 has the potential to deliver a best-in-class or best-in-disease AATD treatment and await the first clinical data in mid-2025/2H25. We anticipate competitor AATD data from WVE/BEAM to have a readthrough to KRRO.
KRRO-110 constitutes a significant commercial opportunity given the high unmet need in AATD. AATD is estimated to severely affect ~100K individuals in the US. Currently, there are no approved disease-modifying AATD treatments, while the SoC is limited to AAT augmentation therapy that is costly (~$100K/year/patient), cumbersome (Q1W), and only addresses the lung manifestation of AATD. KRRO-110 has the potential to be a safe ~Q3W treatment (IV infusion) that addresses both the lung and liver manifestations of AATD, unlike most investigational AATD treatments that only address one manifestation (requiring combo treatments). We model ~$1.5B peak risk-adjusted (20% PoS) revenues for KRRO-110.
Korro applies its RNA editing platform beyond AATD. Korro leverages its platform to generate de novo protein variants (maintaining their functionality while having desired properties) aiming to treat various indications, including ALS and pain. We anticipate Korro's pipeline to attract a partnership, similar to other partnerships in the RNA editing space (PRQR/LLY, WVE/GSK, Shape/Roche), and drive long-term organic growth.
RNA editing holds significant potential based on preclinical data and Korro is one of the leaders in the field. Lead program, KRRO-110 aims to treat AATD and can confer significant commercial opportunity given: (1) High unmet need; (2) No approved disease-modifying therapies; (3) Potential to address both manifestations of AATD. Early pipeline targeting PD, ALS, and pain can drive further upside.
Our target price for KRRO is based on our sum-of-the-parts discounted cash flow analysis driven by NPV of KRRO-110 cash flows through 2039. We use a WACC of 15% based on the methodology for our biotech coverage (9-10% for commercial companies, 12-13% for companies with PhII data, and 15% for companies with preclinical/PhI data). We assign a terminal value to KRRO revenues with a growth rate of 1%.
Our upside case assumes positive KRRO-110 readout in AATD. Under this scenario, the PoS of the AATD program increases to 25% (from 20%), leading to a price of $156, representing ~30% upside from base case of $120. For this scenario to materialize, we would expect favorable efficacy (>>11 uM AAT levels, potential improvements in liver fibrosis) and no safety signals.
Our downside case assumes that all programs fail in clinical trials due to safety signals and/or underwhelming efficacy. Under this scenario, there will be significant uncertainty around Korro's platform and therefore we value Korro at cash of ~$21, which represents ~83% downside from our base case of $120.