Shares of Krystal Biotech can rally nearly 60% as use of its gene therapy to treat cases of herpes simplex virus mount, Goldman Sachs said. Analyst Madhu Kumar upgraded the under-the-radar biotechnology company to a buy from neutral rating, citing opportunities to utilize its HSV treatment to remedy a rare inherited skin condition known as dystrophic epidermolysis bullosa (DEB). Following conversations with management, “we have revised our market model to better reflect Vyjuvek’s opportunity in DEB … which we believe could drive further upside for KRYS shares,” he wrote Tuesday in a note to clients. DEB, a genetic condition primarily causing blistering, affects less than 5,000 individuals in the U.S., according to the National Institutes of Health . Given the promising outlook for the treatment, Kumar raised Goldman’s peak global unadjusted sales expectations to $1.2 billion from $1.5 billion. He also expects a rapid launch of the therapy, anticipating 25% and 48% peak penetration in 2024 and 2025. “We view KRYS as an M & A candidate given the potential for the company’s HSV GT platform to be applied to rare skin disorders and diseases across other organ systems,” he wrote. Along with the upgrade, Kumar upped the Wall Street firm’s price target to $124 from $79, suggesting that shares could potentially rally about 59%. Krystal’s stock is now up about 11% this year after gaining more than 13% in 2022. KRYS YTD mountain Krystal Biotech shares so far this year — CNBC’s Michael Bloom contributed reporting
