RBC starts Lexeo at outperform, cites Friedreich’s ataxia drug opportunity (NASDAQ:LXEO)

RBC Capital Markets has initiated coverage of newly public Lexeo Therapeutics (NASDAQ:LXEO) with an outperform rating, citing the company’s management team and commercial opportunity for its Friedreich’s ataxia drug candidate.

RBC said that Biogen’s (BIIB) recent buy of Reata for $7.3B commercially validated Friedreich’s ataxia as an indication. It added that Lexeo’s drug candidate has shown proof-of-concept cardiac benefits, while Reata’s drug has none. The investment firm said it saw a $1.1B peak market opportunity for Lexeo’s drug, with a 20% probability of success contributing $6 of its price target of $22.

RBC also called Lexeo “pioneers” in cardiac gene therapy, an area where “we have seen clear regulatory flexibility,” citing Rocket Pharmaceuticals.