BMO Says This Stock Could Jump 80% As It Develops Treatments For Blood Disorders

BMO Capital Markets believes investors should pay closer attention to the development of treatments by Disc Medicine for blood disorders as it aims to develop novel treatments.

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With an outperform rating and a price target of $40 on Disc Medicine, analyst Evan David Seigerman initiated coverage, citing the firm's development of biopterin as a potential treatment for erythropoietic porphyrias and other blood disorders. A rare metabolic disorder called erythropoietic porphyrias may cause severe photosensitivity which is accompanied by pain.

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It is crucially important for investors to realize that Bitopertin, Disc's lead asset, represents a compelling value proposition. When combined with the extensive phase 3 data available from Roche (the company's previous owner), Bitopertin represents a relatively risk-free platform that clearly makes sense for investors.

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"The clean safety profile of this program combined with its known mechanism, the high-quality preclinical data, and the potential application for a global launch in a market that is underserved by the current standard of care treatment present a real opportunity for meaningful upside for shares with a good risk/reward profile," Siegerman concluded.

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A reverse merger took place between Disc Medicine and Gemini Therapeutics during the past year, which resulted in the company going public under the ticker symbol "IRON." Since then, Disc Medicine shares have risen by 8%.

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In fact, the analyst's $40 price target shows that Disc Medicine shares may have even greater upside than the current closing price of the shares. This means that the shares could jump by 84% from Wednesday's close.

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Anemia of inflation is one of the other treatments that appear promising in the note, which is DISC-0974, which is being studied in conjunction with treatments for myelofibrosis-related anemia (such as treatment for chronic kidney disease associated with anemia) and anemia in myelofibrosis.

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X-linked protoporphyria (XLP) and erythropoietic protoporphyria (EPP) interim Ph 2 BEACON data expected in 2023 are expected to drive the upside in the near term.

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According to the note, the high POS for bitopertin is partly driven by a positive Ph 2 readout. A 60% probability of success in EPP/XLP is assumed in this scenario, and clinical readouts in 2023 will be positive.