Why Avidity Biosciences surged to a 12% gain this week

Clinical stage biotechnology Avidity Biosciences (RNA 0.53%) had some good news to report late this week, and investors rewarded it by piling into the company’s stock. By the close of trading on Friday, the listed shares had risen nearly 12% in value over the week, according to data compiled by S&P Global Market Intelligence.

Partial clinical hold released

On Thursday, Avidity announced that the US Food and Drug Administration (FDA) has lifted its partial clinical hold on one of the biotech company’s investigational drugs. This is delpacibart etedesiran (del-desiran), also known as AOC 1001, a medicine aimed at fighting a form of muscular dystrophy called myotonic dystrophy type 1.

The drug is being tested in a phase 3 clinical trial. In 2022, the FDA put an end to it following news of a patient experiencing a serious adverse event. Avidity did not disclose the nature of that event, barring recruitment of new patients. The regulator relaxed that stipulation, allowing the company to restart recruitment. The current phase 3 study of del-desiran started earlier this year.

Now that the circumstance has been completely lifted, the drug’s outlook is significantly brighter. It already holds breakthrough therapies, orphan drugs and fast track designations from the FDA.

The Goldman analyst reiterates his bullish view

Investors and pundits alike were heartened by the news. Analyst Corinne Johnson from the influential investment bank Goldman Sachs reiterated its buy recommendation on Avidity stock and its price target of $59 per share. She wrote that the FDA’s move “is incrementally reassuring about the agent’s safety profile, which has been the primary source of investor pushback.”