On Monday, BMO Capital Markets maintained its optimistic stance on shares of Centessa Pharmaceuticals (NASDAQ:CNTA), increasing the stock's price target from $15.00 to $20.00. The firm continues to endorse an Outperform rating for the biopharmaceutical company.
The adjustment reflects the potential of Centessa's involvement in the narcolepsy treatment market, which is currently valued at approximately $2 billion annually worldwide, with existing treatments priced between $100,000 and $300,000 per year.
Current narcolepsy treatments for conditions such as NT1, NT2, and IH have been noted for their limited effectiveness. Orexin agonists, a new category of narcolepsy drugs, are being developed to provide substantial clinical benefits. Among the key players in this space are ALKS, CNTA, and TAK, each working on their versions of the treatment. Centessa Pharmaceuticals is expected to release data from studies on healthy volunteers in the second half of 2024.
The analyst at BMO Capital Markets believes that Centessa has a strong chance, estimated at 65%, of developing a best-in-class orexin agonist profile. Such a development could lead to a significant appreciation in stock value, potentially by more than 50-100%. Moreover, the potential for Centessa to become an attractive acquisition target for companies specializing in sleep disorders outside of narcolepsy was highlighted.
The price target increase to $20.00 comes as Centessa shares have already seen an impressive year-to-date rise of 80%. The firm's continued support for Centessa underlines their confidence in the company's prospects and its position as a top pick in the market.
In other recent news, Centessa Pharmaceuticals announced promising preclinical study results for its drug candidate ORX142, showing potential effectiveness in promoting wakefulness at low doses in non-human primates. The study targets excessive daytime sleepiness associated with certain neurological and psychiatric disorders. Centessa's ORX750, part of its broader orexin agonist program, is currently in a Phase 1 clinical study.
Recent developments also include BMO Capital Markets and Oppenheimer maintaining an Outperform rating for Centessa. BMO's confidence is based on Centessa's productive second quarter and the strategic progression of orexin agonists, while Oppenheimer's positive outlook is based on the potential of Centessa's ORX750 program in treating sleep disorders.
Centessa has also made executive appointments, with John Crowley assuming the role of Chief Financial Officer and Gregory Weinhoff transitioning to Chief Business Officer. The company has priced its public offering of American Depositary Shares at $9.25 each, aiming to raise approximately $100 million in gross proceeds. Lastly, the U.S. Food and Drug Administration approved Centessa's Investigational New Drug application, allowing for Phase 1 clinical trials of ORX750.
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