On Monday, BofA Securities announced a significant reduction in the price target for Neumora Therapeutics (NASDAQ:NMRA) shares, adjusting it to $7.00 from the previous $22.00, while still maintaining a Buy rating on the stock.
According to InvestingPro data, analyst targets for NMRA currently range from $4 to $30, reflecting diverse views on the company's prospects. The adjustment comes after Neumora reported disappointing results from its KOSTAL-1 trial, which tested the efficacy of navacaprant in treating patients with major depressive disorder (MDD).
The KOSTAL-1 trial, one of three phase 3 trials for navacaprant, did not demonstrate a consistent benefit for MDD patients, with an observed imbalance in results between male and female participants. Following the announcement of the trial results, Neumora's stock price plummeted by approximately 80% on Thursday, with InvestingPro data showing a total decline of 86% over the past year.
This sharp decline suggests market skepticism about the drug's potential for approval and commercial success. The stock's RSI indicates oversold conditions, while the company maintains a strong liquidity position with a current ratio of 10.98.
Despite the setback, BofA Securities remains optimistic, citing the possibility of positive outcomes from the remaining two trials, KOSTAL-2 and KOSTAL-3. It is not unusual for drugs targeting MDD to have varying results across different trials, with some succeeding where others fail. However, the failure in a trial involving a new class of drugs, such as KOR antagonism, could also indicate potential failures in subsequent trials.
As a result of the trial's outcome, BofA Securities has revised its probability of success for navacaprant from 65% to 30%. This revision has led to a decrease in projected sales and earnings per share forecasts beginning in 2026, with peak sales expectations for navacaprant in treating MDD now at $1 billion, down from the prior forecast of $2.2 billion.
With a market capitalization of $350.59 million and negative EBITDA of $250 million in the last twelve months, investors seeking deeper insights can access comprehensive financial analysis through InvestingPro's detailed research reports, which cover over 1,400 US stocks.
Despite the reduced price target and the challenges faced by Neumora Therapeutics, BofA Securities has chosen to maintain a Buy rating. This decision is influenced by the current trading price of Neumora's stock, which, at just over $2, is considerably below the new price objective of $7. The firm suggests that there may still be value in the stock, assuming the remaining trials yield positive results.
In other recent news, Neumora Therapeutics has been a focal point of attention with significant developments. The company's lead drug, navacaprant, did not meet the primary endpoint in the Phase 3 KOASTAL-1 study for treating major depressive disorder (MDD), despite showing efficacy in female participants. However, two additional Phase 3 studies, KOASTAL-2 and KOASTAL-3, are ongoing.
Following these developments, H.C. Wainwright reaffirmed its Buy rating on Neumora Therapeutics, citing confidence in the drug's mechanism and pharmacology. Mizuho (NYSE:MFG) Securities also reiterated its Outperform rating on the company's stock, despite the setback with navacaprant.
RBC (TSX:RY) Capital Markets, however, downgraded the stock to a Sector Perform rating following the disappointing trial results. These are recent developments that could potentially impact the company's future trajectory.
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