TD Cowen reaffirms Buy rating on Humacyte stock, believes FDA observations are resolved

On Friday, TD Cowen reaffirmed its confidence in Humacyte (NASDAQ:HUMA), maintaining a Buy rating and a price target of $10.00. The firm addressed concerns regarding Humacyte’s stock performance, which recently faced downward pressure following the public disclosure of Form 483 observations from the FDA’s inspection of the company’s manufacturing facility.

The analyst from TD Cowen expressed belief that the issues noted by the FDA were minor and likely resolved months prior. Despite not having direct communication with Humacyte’s management, the analyst conveyed the opinion that these observations are not currently an issue and do not contribute to the delay in the Biologics License Application (BLA) approval decision for the company.

Humacyte’s shares experienced a decline after the FDA inspection findings became public knowledge. Form 483 is used by the FDA to document and communicate concerns discovered during inspections. The nature of these observations can range from minor infractions to more significant compliance issues.

The analyst’s statement suggests an expectation that the FDA’s observations have been adequately addressed by Humacyte. The company is currently awaiting a decision on their BLA, which is a request for permission to introduce, or deliver for introduction, a biologic product into interstate commerce.

The reaffirmation of the Buy rating and the $10.00 price target by TD Cowen indicates their belief in the company’s potential and future performance despite recent regulatory challenges. The analyst’s comments aim to provide clarity to investors regarding the recent stock movement and the anticipated resolution of FDA observations.

In other recent news, biotech company Humacyte has been in the spotlight due to several key developments. The firm reported a net loss of $56.7 million for a recent quarter while simultaneously raising approximately $30 million through a registered direct offering of common stock and warrants.

Furthermore, Humacyte’s Acute Tissue Engineered Vascular (ATEV) product has shown promising results in Phase 3 trials, but the FDA review for vascular trauma has been postponed. The company has also been granted a U.S. Patent for its BioVascular Pancreas (BVP), a device aimed at treating type 1 diabetes.

Investment firms TD Cowen, EF Hutton, and Benchmark have all maintained a Buy rating on Humacyte, with respective price targets of $10, $25, and $15. Piper Sandler and BTIG, on the other hand, have reiterated their neutral stance and Buy rating respectively, following the issuance of an FDA Form 483, which led to a review of the approval timeline for Humacyte’s ATEV product. The company is actively addressing the issues raised by the FDA.

Humacyte has also reported positive long-term results from a humanitarian program using its ATEV to treat severe vascular injuries in a military setting.

InvestingPro Insights

Recent InvestingPro data provides additional context to Humacyte’s (NASDAQ:HUMA) current financial situation and market performance. Despite the recent FDA inspection concerns, the company’s stock has shown remarkable resilience over the longer term. InvestingPro data reveals that Humacyte has achieved a 100.83% price total return over the past year, indicating strong investor confidence in the company’s potential.

However, it’s important to note that Humacyte faces some financial challenges. An InvestingPro Tip highlights that the company is not profitable over the last twelve months, with a negative gross profit of $77.12 million for the same period. This aligns with another tip suggesting that analysts do not anticipate the company will be profitable this year.

On a positive note, Humacyte holds more cash than debt on its balance sheet, which could provide financial flexibility as it navigates regulatory hurdles and works towards commercialization.

For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Humacyte, providing a deeper understanding of the company’s financial health and market position.

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