On Friday, Mizuho (NYSE:MFG) Securities reiterated its Outperform rating on Neumora Therapeutics (NASDAQ:NMRA) with a steady price target of $20.00, despite the company's recent setback with its lead drug candidate, navacaprant.
The analysts maintained their positive stance even after Neumora announced disappointing results from its Phase 3 KOASTAL-1/K-1 study in patients with major depressive disorder (MDD) on Thursday.
Navacaprant failed to meet both primary and secondary endpoints in the study, which led to Neumora's stock plummeting approximately 80%, a stark contrast to the 2% gain in the XBI biotech index. Mizuho analysts expressed disappointment but not surprise at the market reaction to the negative study outcomes.
The firm highlighted that Neumora still has two ongoing Phase 3 studies for navacaprant, KOASTAL-2/K-2 and KOASTAL-3/K-3, with results expected in the first half of 2025. The analysts are looking forward to Neumora's planned update on the navacaprant program, which is expected in the coming weeks. This update will inform Mizuho's reassessment of their estimates and outlook for the company.
Mizuho also noted that changes in their probability of success (POS) assumptions could significantly affect their price target, with every 5% adjustment potentially impacting the target by approximately $2 to $2.50. Despite the recent drop, Mizuho views Neumora's stock as oversold. They point out that the company is now trading at a negative enterprise value but has a cash runway extending to mid-2026 and other pipeline programs that could offer value to investors.
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