Rocket Pharmaceuticals, Inc. (NASDAQ: RCKT) is a $1bn company. The RCKT share price soared over 433% between March 2020 and February 2021, but this past year has seen a 63% decline. Is RCKT stock on the road to ruin, or can it stage a sensational comeback?
What is Rocket Pharmaceuticals, Inc?
Rocket Pharmaceuticals, Inc. is a clinical-stage biotech company advancing an integrated and sustainable pipeline of genetic therapies for rare childhood disorders. It currently looks at bone marrow and cardiac treatments and will potentially add another discipline in the future.
Rocket’s leading gene therapy program aims to tackle genetic diseases that can lead to cancer, anemia and death. These include Danon Disease, Fanconi Anemia (FA), Leukocyte Adhesion Deficiency-I (LAD-I), and Pyruvate Kinase Deficiency (PKD).
The company was founded on July 7, 1999, and is headquartered in New York, NY.
Why is Rocket Pharma stock so volatile?
Pharmaceutical stocks, particularly early-stage R&D companies, are notoriously volatile. That’s because R&D is capital intensive, and shareholders buy and sell the news, which can be frequent and hope is sometimes rewarded and dashed.
In May last year, Rocket’s Danon Disease program was placed on clinical hold by the FDA. In August, this clinical hold was lifted after Rocket modified the trial protocol, allowing patient enrollment in Rocket’s Phase 1 clinical trial to resume. Uncertainty like this is commonplace and causes share price volatility.
Rocket Pharmaceuticals is not yet making money, so it sometimes raises capital by issuing shares. This dilutes the value of RCKT stock for existing shareholders and also influences a fluctuating share price.
For instance, holders of RCKT convertible notes converted them into more than 160k RCKT shares in August. Later that month, the company sold and issued over 812k shares to a fund in a private placement at $32.48 per share. This accounted for the share price volatility last August.
At the end of 2021, Rocket stopped R&D into infantile malignant osteoporosis (IMO), which it had spent a couple of years working on. This news was disappointing to some shareholders. Unfortunately, it decided the time and money would be better spent elsewhere to focus on a more extensive base of addressable patients.
One of these is Danon disease, with a potential prevalence of 15,000 to 30,000 patients.
The company is seeking a gene therapy cure for Danon and is currently analyzing the prevalence of Danon patients worldwide to reach a more accurate reading.
This month the RCKT share price has been rising again after the company presented at the 40th Annual JP Morgan Virtual Healthcare Conference with an upbeat outlook.
Is RCKT stock a good investment?
Early-stage Pharma stocks come with the chance to reap huge rewards, but that coincides with considerable risk. This makes them attractive to investors looking to push the risk/reward boundary.
At its recent presentation, Rocket’s CEO appeared excited about the multiple milestones Rocket has ahead in 2022. Indeed, he anticipates data from Phase 2 activities by the end of this year, supported by emerging data on the natural history of disease in untreated patients. Early indications show a safe start to the pediatric cohort so far.
Additionally, the company is growing its pipeline, including in-house manufacturing for AAV.
So far, Rocket has focused on AAV (in the body) and lentiviral (outside body) modes of delivery for its therapies. Gaurav Shah, the RCKT CEO, recently said, “there are probably more organs that can be targeted with AAV, and I think the number of opportunities there is greater, but we remain agnostic.”
Then in 2023 and 2024, Rocket Pharmaceuticals anticipate approvals and launches in its first two lenti programs.
The individuals heading up Rocket’s leadership team have participated in more than 20 drug approvals and launches in biotech and pharma. This gives them considerable experience to draw from when planning the future of Rocket.
Rocket Pharma is building its in-house manufacturing capability to support AAV in the future and is looking to expand its team.
Early efficacy results have been encouraging, giving RCKT stock underlying potential. It appears to be suppressed by general market sentiment, which has been negative lately.
So, the question is, does Rocket Pharmaceuticals (RCKT) stock offer high return prospects?
In this line of business, hope reigns supreme. If Rocket's gene therapy trials succeed, patient shareholders could be rewarded.
Nevertheless, gene therapy is still an emerging field with a risk burden yet to be eased. Therefore, it’s a stock more suited to investors with a long-term investment horizon and considerable risk appetite.