Is Rocket Pharma Stock A Good Buy?

Rocket Pharmaceuticals Inc (NASDAQ:RCKT) is a New York City-based biotechnology company focused on developing gene-modified cell therapies to combat a variety of diseases.

Its pipeline includes treatments for Danon Disease, Fanconi Anemia, Leuokocyte Adhesion Deficiency-I, Pyruvate Kinase Deficiency, and Infantile Malignant Osteopetrosis, many of which are in late-stage clinical trials.

Many of its products are so far proving effective, so is Rocket Pharmaceuticals stock a Buy?

The stock crashed in January 2017 to under $10 per share, or about a third of its Initial Public Offering (IPO) price level. 

Since then RCKT share price has slowly worked its way higher to over 3x that low level. Finally proving efficacy of at least one treatment (several are currently fast-tracked) could prove a financial boon for investors.

While it already recovered from its share price losses when the overall market nosedived, Rocket Pharmaceuticals still has plenty of growth potential.

Some analysts project it could grow tenfold if its current pipeline proves both medically and financially viable. But these are a lot of “ifs,” so let’s look under the hood to see if it’s possible.

Rocket Pharmaceuticals Is A Gene Specialist

Rocket pharmaceuticals is a biotechnology company focused on gene and cell therapies for a variety or rare diseases. Gene modification is exactly what you’re thinking of when discussing genetically modified organisms (GMOs) in food.

Plants and seeds are manipulated at a genetic level to produce certain results, such as sweeter apples or more potent cannabis. This genetic approach is considered a viable treatment for a range of diseases, including certain cancers.

The process involves transferring healthy, genetically modified cells into an infected vector to help counter the effects of damaged cells. Because these damaged cells multiply, their faulty genetic information also transfers into the new cells. These cell therapies can theoretically be used to treat a wide variety of conditions.

Those theories are proving true so far in clinical trials; the company has several late-stage trials running at the end of 2020. As soon as one proves effective, Rocket Pharma share price could be set to take off like its namesake.

Is Rocket Pharmaceuticals Stock a Buy?

Rocket Pharmaceuticals has been trading recently with a market capitalization range of between $1.5 billion and $2 billion. RCKT share price is up from a 52-week low of $9.01.

Its September earnings report release in November showed a strong balance sheet that had $229 million in cash and cash equivalents on hand.

Notably, its RP-L201 trial for LAD-I is showing good results, as is the Phase 1 study on RP-A501 for Danon Disease.

This trial data sounds like a big step in the right direction, and the company is ramping up production capabilities while still pushing the gas on R&D. Should these treatments be approved by the U.S. Food and Drug Administration (FDA), the company could enjoy significant potential upside.

Of course, getting clinically approved isn’t ever easy. And the coronavirus pandemic put these viral vaccinations front-and-center on most investors’ lists. There’s still a long and rocky road filled with hurdles to overcome.

Rocket Pharma Share Price Risks

The biggest problem Rocket Pharmaceuticals has is its small size. It’s pouring hundreds of millions into research and development to prove efficacy of a new type of treatment. In doing so, it’s taking on much of the up-front risk, while limiting its potential upside in the backend.

Other competitors will surely flood the market when efficacy is proven, and many of them have much deeper pockets than this scrappy startup. This means it’s going to continue draining its cash reserves over the next five years while ramping up its sales and marketing teams, along with production.

Being a vertically integrated company isn’t easy in pharmaceuticals or biotechnologies. These gene therapy treatments require a lot of applications and take a long time to push through each phase, even when fast-tracked.

Should a larger player decide to muscle in on Rocket Pharmaceuticals, there’s not much it can do to stop it without raising more cash or accepting a buyout.

Can Rocket Pharmaceuticals Competitors Win?

Being on the bleeding edge of biotechnology isn’t easy, but Rocket Pharmaceuticals isn’t alone in its endeavor. The company is competing with startups like Spark Therapeutics, Axovant Sciences, and Magenta Therapeutics, to name a few.

Each of these competitors is smaller and presents little risk alone. But they can be dangerous if their technologies work (and are different enough). A larger company can pick up one of the rivals and use it to eat away at Rocket’s potential profits.

Of course, FDA approval isn’t easy to get. The more applications it can gain approval for, the more sales channels and revenue streams the company opens. It will need to open as many as possible if it expects to grow into a giant like Novo Nordisk (NVO), Regeneron Pharmaceuticals (REGN), and Alexion Pharmaceuticals (ALXN).

Is Rocket Pharma Stock A Good Buy? The Bottom Line

Rocket Pharmaceuticals is a biotechnology at the forefront of gene-modified cellular therapies. This medical innovation replaces damaged cells with healthy GMO cells to help patients combat and recover from a variety of rare and often deadly diseases.

It took a long path through regulatory approval and made a lot of progress. The company’s treatment pipeline covers an array of applications, with positive results being reported almost across the board. This is a strong sign that the company may be ready to launch investors to the moon.

But nothing is proven yet – the company still has a long road ahead to gain approval, manufacture, market, and sell its treatments. This is going to burn cash fast and only gives it a five-year runway. If it maximizes those five years, it can create steady gains for those in on the ground floor.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.