2024 continues to be a year of efficient clinical execution for management, with key upcoming catalysts including: (1) VERVE-101 PhIb readout in 2H24, with data from healthier patients than the first dataset (here), thereby, enabling an improved/unbiased safety profile; (2) VERVE-102 PhIb initiation in 1H24, with a readout in 2025; (3) VERVE-201 PhI initiation in 2H24. Importantly, in 2025 management will initiate a PhII trial with VERVE-101 or VERVE-102, and LLY's potential opt-in for co-development will be an inflection point for VERV. Remaining OP, VERV is our 2H24 top pick.
VERVE-101 data update in 2H24 an important catalyst for VERV's platform: (1) Management reiterated guidance on enrollment completion (0.45 and 0.6mg/kg, including U.S. patients) of VERVE-101 PhIb trial in 2024 (IND was cleared in 3Q24 here). The data readout is on track for 2H24, wherein we anticipate data from patients who are healthier than the first 10 enrolled patients (here), thus the likelihood for unexpected safety signals that bias the readout is lower. We believe the 2H24 data update is very critical, as it can potentially remove the overhang around VERVE-101 safety, setting the stage for a potentially superior VERVE-102 safety/efficacy profile due to different LNP and GalNAc addition; (2) VERVE-102 PhI study is expected to initiate in 1H24, with a readout planned for 2025. In 2025, management will select which candidate (VERVE-101 or VERVE-102) to advance in PhII, while LLY may practice its option to opt in for co-development. We see LLY's potential decision to opt in as an inflection point for VERV that can drive significant upside and attract increased investor interest.
Early pipeline programs (VERVE-201, Lp(a)) continue to advance towards the clinic. (1) VERVE-201 ex-US PhI trial is expected to initiate in 2H24, assuming regulatory clearance; (2) The Lp(a) program with LLY (Lp(a) landscape here) and the undisclosed liver program with VRTX are also progressing. Although some investors believe that management may be implementing epigenetic editing in these two partnered programs, management commented that it is utilizing gene editing.
VERV ended 4Q23 with ~$625M cash and equivalents which, according to management, provides runway into late 2026.
Our Outperform rating is supported by our analysis of the company's gene editing strategy for CVD with the following fundamental drivers: (1) World-class management team increases the PoS for Verve; (2) Preclinical VERVE-101 data are robust and highly supported by KOLs/literature; (3) Lead indication (FH) is characterized by high prevalence and can create a large commercial opportunity.
Our $56 target price is derived from our SOTP DCF analysis, using a 15% WACC and 0% terminal growth rate.
$69.00
It assumes positive VERVE-101 data de-risks Verve's base editors in clinic. Under this scenario, the PoS for the VERVE-101 program increases to 40% (from 20%/30% in US/EU base), leading to upside to $69.
$10.00
It assumes that VERVE-101 fails in clinical development due to emerging safety signals and/or lack of efficacy. Under this scenario, the probability of success for VERVE-101 is 0% (from 30% base case) and we value at cash of $10, which represents ~82% downside from our base case of $56.