On Thursday, BTIG revised its rating on shares of Keros Therapeutics (NASDAQ:KROS), moving from a Buy to a Neutral stance. The decision comes after a safety update that the firm considers "thesis-breaking." The downgrade comes despite the stock's impressive 72% gain year-to-date and a generally bullish consensus among analysts.
According to InvestingPro data, the stock maintains a strong buy recommendation with a price target range of $76-$113. According to BTIG, the Phase 1 trial of cibotercept (formerly known as KER-012) only achieved higher activin pathway inhibition at a dosage of 4.5mg/kg, which is comparable to the effects of sotatercept at lower doses. This undermines the expectation that cibotercept would yield significantly better pulmonary vascular resistance (PVR) results.
The analyst noted that cibotercept's lack of impact on hemoglobin levels, originally seen as a key differentiator from sotatercept, is now considered less likely to be advantageous. Concerns were raised regarding the drug's potential for real-world safety data to convincingly address risks of bleeding events and telangiectasias. Moreover, the FDA may adopt a cautious stance regarding these risks in drug labeling.
BTIG also expressed skepticism about the distinctiveness of KER-050's efficacy in comparison to luspatercept for conditions such as Hypomethylating Agents-Treated and Ring Sideroblast negative Myelodysplastic Syndromes (HTB or RS negative MDS).
InvestingPro analysis reveals that while the company faces profitability challenges, it maintains a strong financial position with a current ratio of 19.03, indicating robust liquidity to fund its development programs.
The recent partnership with Takeda Pharmaceutical (TADAWUL:2070) Company (NYSE:TAK) (Not Rated) was acknowledged as strategic, but the firm anticipates that more data will be required to validate Keros management's strategy regarding this asset.
Furthermore, BTIG casts doubt on the market potential for KER-065, a strong anabolic agent aimed at treating obesity. The firm suggests that the path to product registration will be challenging, as conventional endpoints used to measure efficacy, such as changes in body weight, may not showcase KER-065's effectiveness when compared to other treatments like incretins, amylin analogues, or their combinations.
BTIG's model estimates Keros Therapeutics' net cash at approximately $17 per share as of the fourth quarter of 2024. With a market capitalization of $2.78 billion, the company holds more cash than debt on its balance sheet, providing financial flexibility for its development pipeline. Discover more detailed financial metrics and 13 additional investment insights with InvestingPro.
In other recent news, Keros Therapeutics has been the subject of numerous analyst reports following a significant licensing agreement with Takeda. The agreement centers on the development of elritercept and includes an upfront payment of $200 million to Keros, potentially reaching $1.1 billion in milestone payments.
The deal has been viewed positively by analyst firms including Guggenheim, BofA Securities, and Jefferies, which have maintained or initiated Buy ratings on the company's stock, with price targets ranging from $77 to $107.
Keros Therapeutics has also made noteworthy progress in its clinical trials. The company recently completed patient enrollment for its Phase 2 TROPOS trial, studying the potential of cibotercept in treating pulmonary arterial hypertension (PAH), with top-line data expected in 2025. This development was mentioned by Truist Securities, Piper Sandler, and Cantor Fitzgerald, which maintained positive ratings on the company.
In terms of leadership changes, Keros Therapeutics recently appointed Dr. Yung H. Chyung as its new Chief Medical (TASE:PMCN) Officer, a strategic move as the company prepares for significant clinical milestones. These recent developments reflect Keros Therapeutics' ongoing efforts to advance its drug candidates and strengthen its financial position.
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