Edgewise Therapeutics (EWTX) has been making headlines recently, with its stock price surging by 50% in a single session and a staggering 450% since hitting recent lows. This dramatic climb is fueled by the impressive early-stage results of its novel, oral, selective treatment for obstructive hypertrophic cardiomyopathy (HCM). Why is this news so significant? HCM, the leading cause of sudden cardiac-related death in individuals under 35, is a genetic disease that causes thickening in the heart muscle. It’s a growing market worth over $1.25 billion today, and currently, doctors rely heavily on beta-blockers and lifestyle changes for management. Edgewise’s potential treatment, if approved, could revolutionize the way HCM is treated, potentially becoming a blockbuster drug like GLP-1 blockers, which are transforming weight control.
“There continues to be an unmet need for patients with obstructive and non-obstructive HCM, and we are excited to be part of the ongoing CIRRUS-HCM trial evaluating a novel treatment,” commented Anjali T. Owens, M.D., Medical Director, Center for Inherited Cardiac Disease, Associate Professor of Medicine, University of Pennsylvania and CIRRUS-HCM Investigator.
The market is buzzing with excitement about Edgewise’s future. After a period of stagnation, the company’s share price has taken off this year, fueled by positive news and a renewed interest from analysts. Sell-side analysts, who previously reduced their price targets, are now revising them upwards. The consensus estimate reported by Marketbeat.com suggests at least a 15% upside from the current $28 level, with some analysts even predicting a 70% rise in the next twelve months. Wedbush, for example, recently raised its target for Edgewise by 42% to $44, just shy of the high of $48 set by Piper Sandler earlier this year.
Institutional investors are also bullish on Edgewise, with their activity reaching record levels in Q2 and remaining strong in Q3. The takeaway? Institutions, private equity, and venture capital own roughly 90% of Edgewise, while insiders hold another 4.5%, showcasing a high level of confidence in the company’s future.
However, the short interest in Edgewise is another factor driving the recent volatility. At nearly 15%, this level is significant enough to trigger a potential short squeeze. While Edgewise’s treatment is still in early trials and far from approval, this short-selling pressure could lead to a decline in the share price in the coming quarters as short-sellers try to reposition themselves at higher levels.
While volatility is expected, the potential for a pullback could create an opportunity for investors to enter at a more attractive price point. The stock could potentially retreat to the $22 level or lower, providing a better entry point for those interested in getting in on the ground floor of this promising company.
Edgewise isn’t just a one-trick pony. The company boasts an attractive, albeit small, pipeline of other potential therapies in early stages of development. These include treatments for Duchenne and Becker muscular dystrophy, which have shown promising early results. The next batch of results from these trials is anticipated in Q4 of this year and could serve as another catalyst for the market.
From an operational standpoint, Edgewise currently reports losses due to its research and development efforts and lack of revenue. However, these losses are manageable, considering the company’s strong balance sheet. Edgewise possesses over half a billion dollars in cash, providing enough runway for continued operations at current levels for over 15 quarters.
The price chart for EWTX is painting a positive picture. The market appears to be recovering from its post-IPO slump, with a full reversal underway. This price action is further supported by growing volume, suggesting a strong probability of continued upward momentum. However, investors should anticipate resistance around the all-time highs until further developments are announced.
The future looks bright for Edgewise Therapeutics. With its promising treatment for HCM, a strong pipeline of other potential therapies, and a robust financial position, the company is well-positioned to capitalize on the growing market for innovative medical solutions. While volatility is expected, the long-term outlook for Edgewise remains positive, particularly as investors increasingly recognize the potential of its groundbreaking technology.
