Biotech ProKidney soars 500% after positive trial results, but analysts are cautious

Biotech ProKidney, which develops a cell therapy platform for the treatment of multiple chronic kidney diseases, rose sixfold yesterday, July 8, to reach a market capitalization of $1.8 billion. The trigger was successful clinical trial results of its drug, but analysts are cautious. 

Shares of ProKidney rose 515% to $3.70 apiece on the Nasdaq yesterday. In premarket trading today, ProKidney continued to rally, adding another 55%.

Yesterday's trading halted 45 times due to volatility. Trading volume exploded to 327.3 million shares, versus an average of about 1.3 million, reports MarketWatch. 

Investors reacted to the company's announcement of positive results from a phase II trial of its drug rilparencel. It noted a "robust improvement" in a measure of chronic and diabetes, while none of the 49 patients who received at least one dose of the drug experienced serious side effects. 

The company had planned to publish full results from phase III trials by the third quarter of 2027 and then get approval to market the drug in the U.S. from the FDA. Now, however, ProKidney has a chance for accelerated approval at a meeting in the coming weeks, the biotech announced. 

Analysts were cautious about the news, however. Jason Gerberry of BofA noted there was no investor call to discuss the results of the trial. He maintained his "underperform" rating on ProKidney stock and reiterated his $1 per share target price, adding that clarity on the drug's regulatory pathway is still lacking.

Jonathan Miller, an analyst at Evercore ISI, also said that "we still has [questions]" ahead of the phase III trial. He believes that trial could be a "major catalyst in the kidney space,” but he is concerned about some nuances of the data. 

Citi analysts were more sanguine, raising their target price for ProKidney from $6 per share to $9 per share and keeping their "buy" recommendation. Their probability of success estimate also increased by 10% to 60%.

Of the seven analysts who track ProKidney, three have "buys," three "holds," and one "underweight," according to MarketWatch. Their latest average target price offers growth of a quarter versus the closing price after yesterday's rally. 

The largest group of shareholders of ProKidney as of April is institutional investors, who own 32% of the company, says Simply Wall St. Another 22% is held by insiders. In April, they bought more than 2 million ProKidney shares at prices ranging from $0.61 per share to $0.75 per share, a discount of 400% versus the July 8 close. Another 30.0% of the stock is held by individual investors, 9.5% by hedge funds, and 6.5% by private equity firms. 

The AI translation of this story was reviewed by a human editor.