On Tuesday, Raymond James adjusted its stance on NGM Biopharmaceuticals (NASDAQ:NGM), downgrading the stock from Outperform to Market Perform. The revision comes in light of the anticipated merger with Atlas (NYSE:ATCO) Neon, which is slated to transition NGM Biopharmaceuticals into a private entity in the second quarter of 2024, provided it meets certain conditions necessary for closure.
The firm expressed concerns that the merger might not be the most favorable scenario for NGM or its investors, suggesting that it could result in missed opportunities for value creation that would have been possible had the company remained public. This perspective is based on the projection that the merger could limit potential gains for shareholders that might have been achievable through the public market.
Additionally, Raymond James has updated its financial model for NGM to reflect the fourth quarter of 2023. The clinical updates included in the model are noteworthy. NGM is on track to finalize enrollment for a Phase 1/1b combination cohort of NGM707, an ILT2/4 inhibitor, with pembrolizumab (pembro) in the second quarter of 2024. A mid-year update on future development plans, including potential applications in MSS colorectal cancer (MSS CRC), is expected.
The company has also completed enrollment for a Phase 1/1b triplet combination cohort, which includes NGM831 (ILT3 antagonist), NGM438 (LAIR1 antagonist), and pembro. Furthermore, NGM is currently engaged in regulatory discussions about aldafermin for the treatment of primary sclerosing cholangitis (PSC).
Lastly, toxicology studies for NGM120, a GDF15/GFRAL antagonist, are anticipated to be finished by the end of 2024. These studies will pave the way for the development of treatments for hyperemesis gravidarum, with the initiation of a Proof of Concept (PoC) Phase 2 study also expected around the same time.
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