Atrium Therapeutics is a buy, this analyst says

Roth Capital Partners analyst Boobalan Pachaiyappan initiated coverage of Atrium Therapeutics (Atrium Therapeutics, Stock Quote, Chart, News, Analysts, Financials NASDAQ:RNA) with a “Buy” rating and US$15.00 target, citing the company’s potential to develop RNA-based treatments for rare genetic heart diseases.

Pachaiyappan said Atrium’s two lead programs offer significant commercial potential, although the company’s ability to deliver RNA therapies to human heart tissue remains unproven.

“We see an opportunity to silence genetic drivers of rare cardiomyopathies, particularly PRKAG2 syndrome (U.S. TAM: ~1K-2K patients; per RNA) and PLN cardiomyopathy (U.S. TAM: ~2K-4K) for which there is no therapy,” he said in his Oct. 22 initiation report.

Atrium was spun out of Avidity Biosciences ahead of Novartis’s approximately US$12-billion acquisition of Avidity. The company is developing treatments designed to silence genes responsible for certain inherited heart conditions, potentially addressing the underlying causes rather than managing symptoms.

Pachaiyappan said Atrium’s shares have declined sharply following disappointing Phase 3 results from an Avidity program targeting myotonic dystrophy type 1 (DM1). However, he believes investors may be drawing the wrong conclusions about Atrium’s technology.

“Novartis/Avidity’s advancements in Facioscapulohumeral muscular dystrophy (FSHD) could offer closer mechanistic read-through,” he said.

The analyst explained that Atrium’s technology, like Avidity’s FSHD program, targets messenger RNA in the cell’s cytoplasm, rather than the more difficult nuclear RNA target involved in DM1. “We believe this distinction argues against indiscriminate read-through—not against clinical risk,” Pachaiyappan said.

He highlighted Atrium’s cash position as another reason for his positive outlook. The company is expected to have approximately US$269-million in pro forma cash at the end of 2026, including proceeds from a US$50-million private placement completed in October. That compares with an equity market value of about US$174-million, implying negative enterprise value of US$95-million. “Cash-backed dislocation,” Pachaiyappan said, arguing that the recent selloff has discounted the company’s pipeline before its first human cardiac results become available.

Atrium’s lead candidate, ATR1072, targets PRKAG2 syndrome, a rare inherited condition that can cause abnormal heart muscle thickening, electrical problems and heart failure. The FDA has cleared the company’s investigational new drug application, with initial Phase 1/2 data expected in the second half of 2027.

Pachaiyappan’s base case assumes the treatment will reduce targeted messenger RNA by 30% to less than 50%, accompanied by a measurable reduction in abnormal glycogen accumulation in heart tissue and acceptable safety results. He estimates a potential U.S. launch in 2031, with unrisked peak worldwide sales of approximately US$700-million in 2040.

The company’s second candidate, ATR1086, targets PLN cardiomyopathy, another inherited condition associated with heart failure and potentially fatal arrhythmias. “PLN adds larger upside,” Pachaiyappan said.

He noted that ATR1086 achieved 100% survival through 20 weeks in a lethal humanized mouse model. Pachaiyappan expects the program to enter clinical development in 2027, with a potential U.S. launch in 2032 and unrisked peak sales of approximately US$1.31-billion.

The analyst also highlighted Atrium’s collaborations with Bristol Myers Squibb and Eli Lilly. “Partner economics add optionality,” he said. Across Avidity and Atrium, the partnerships have generated US$160-million in payments or earned consideration, including US$40-million in equity investments.

Pachaiyappan said approximately US$1.5-billion in potential research and development milestones remains available, along with commercial milestones and royalties. Those potential payments are not included in his pipeline valuation.

His US$15.00 target is based on a discounted cash flow analysis incorporating both lead programs, with assumed probabilities of approval of 25% for ATR1072 and 15% for ATR1086.

Pachaiyappan emphasized that successful delivery of the treatment to heart cells will not, by itself, establish clinical effectiveness. The key test will be whether reducing the targeted RNA produces meaningful improvements in the underlying heart disease without unacceptable side effects.

Atrium expects to begin dosing patients in its ATR1072 study before the end of 2026, with initial data in the second half of 2027. Pachaiyappan said those results will be critical to determining whether Atrium’s technology can translate promising preclinical findings into effective human treatments.

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