Roivant Sciences Ltd. (NASDAQ:ROIV) soared to a new all-time high on Tuesday after reporting stellar results from the clinical trial of its treatment candidate for pulmonary hypertension associated with interstitial lung disease (PH-ILD).
In intra-day trading, the stock jumped to its highest price of $42.50 before trimming gains to end the session just up by 18.75 percent at $41.48 apiece.
According to the company, the second phase of the clinical study met its primary endpoint of slashing pulmonary vascular resistance (PVR) through its drug candidate, mosliciguat, by 56.3 percent at week 16, in comparison with the placebo group.
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PVR measures how difficult it is for blood to flow through the lungs. A lower number means blood can flow more easily.
Additionally, the study met its secondary endpoint of improving patients’ six-minute walking distance by about 20 meters, while the placebo group declined by 15 meters.
More notably, the drug candidate generally holds a favorable safety profile and a lower proportion of patients experiencing cough.
What it Means for Roivant
The positive study poses a huge revenue growth opportunity for Roivant Sciences Ltd., with up to 200,000 patients across the US and Europe estimated to be living with PH-ILD.
At present, there is a limited to no approved treatment option for PH-ILD, which could spark rosy growth prospects for the listed firm if it becomes successful in translating its investigational drug into a commercialized product.
“These PHocus results proved that out as clearly as we could have hoped: a profound 56.3 percent placebo-adjusted PVR reduction—the largest PVR reported in any controlled pulmonary hypertension trial of any group,” said President and Chief Investment Officer Mayukh Sukhatme.
“It is a terrific example of the Roivant model working as planned: finding high-potential molecules and going after diseases where the patient needs are enormous and where the drug can truly shine,” he noted.
Roivant Sciences Ltd. officially initiated the third phase of the clinical trial following the successful second phase.
Higher Price Target
Following the results, investment firm Jefferies raised its price target for Roivant Sciences Ltd. to $52 from $42 previously, while maintaining its buy recommendation.
According to Jefferies, its coverage reflected its optimism for the listed firm to hit peak sales of more than $5 billion from the drug candidate in multiple indications.
Hedge Funds Bullish
Institutional investors appeared to be highly optimistic about the company’s long-term growth prospects, as evident from the higher number of hedge funds seeking exposure to the stock, alongside the whopping jump in their committed capital.
Data from Insider Monkey showed that 64 hedge funds held positions in Roivant Sciences Ltd. in the second quarter of the year, up from 60 in the first quarter.
More notably, their combined holdings soared by 41 percent to $4.95 billion from $3.5 billion quarter-on-quarter.
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