technology

JPMorgan Tells Clients to Sell Biotech It Helped Take Public

  • Shares of Solid Biosciences fall below initial offering price
  • FDA halted clinical trial of the company’s rare-disease drug

In January, JPMorgan Chase & Co. was helping bring shares of Solid Biosciences Inc. to the public markets. Now, it’s telling clients to sell the stock.

JPMorgan analyst Anupam Rama downgraded his rating on the biotechnology company’s shares to underweight on Thursday with a $9 price target, after Solid Biosciences said the U.S. Food and Drug Administration had halted its study of its experimental gene-transfer treatment for a rare degenerative disease that affects young boys after a patient was hospitalized. Rama previously rated the stock neutral with a $28 target.

The FDA’s halt and the downgrade sent shares plummeting. They were down by 64 percent to $9.52 at 12:46 p.m. on Thursday. That’s well below the $16 a share company went for in IPO that JPMorgan helped underwrite less than two months ago.

“There are now multiple concerns” with the company’s program, including how fast it can resume the trial and how much ground it may lose to competitors, Rama said in the note to clients announcing the downgrade.

“In our view, it will likely take compelling clinical data to regain confidence in management (not expected in the near-term),” Rama said.

Rama’s office directed questions to a JPMorgan spokesman, who declined to comment.

In the offering document, Solid Biosciences acknowledged that “our risk of failure is high.” That became evident when during the IPO process, the company disclosed that its study had been on partial hold following a November 2017 letter from regulators.

A company spokeswoman declined to comment on the stock-rating downgrade in an email.

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