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On Monday, BMO Capital Markets adjusted its outlook on Neurogene (NASDAQ:NGNE) by significantly reducing the company’s price target from $45.00 to $16.00. Despite this change, the firm maintained an Outperform rating on the stock. The price target revision comes after the unfortunate death of a patient who was administered a high dose of NGN-401 and the recent departure of Peter Marks from the company. The stock, currently trading at $11, has experienced significant volatility, with a remarkable 40% gain in the past week despite a 78% decline over six months. According to InvestingPro analysis, Neurogene appears undervalued based on its Fair Value assessment.
BMO Capital’s analyst Keith Tapper provided insights into the decision to lower the price target, citing a reassessment of NGN-401’s market potential, particularly in the Rett syndrome market. According to Tapper, while the low-dose profile of NGN-401 remains competitive, the expectations for the drug’s market penetration have been moderated in light of recent events. InvestingPro data reveals the company maintains a strong liquidity position with a current ratio of 20.84 and more cash than debt, though it’s currently burning through cash reserves rapidly.
The analyst also mentioned the anticipation of Phase 1/2 REVEAL data for TSHA-102, which is expected to potentially show improvements over the early low-dose data. This progress could narrow the competitive gap between Taysha and Neurogene, which is an important factor in the analyst’s evaluation.
Tapper further indicated that updates on the pivotal trial design for NGN-401 could positively influence market sentiment moving forward. These updates are seen as a critical step in regaining confidence and improving the perception of Neurogene’s prospects in the development of treatments for Rett syndrome.
Neurogene’s stock price target adjustment reflects new developments and challenges the company faces. However, BMO Capital Markets continues to see value in Neurogene’s offerings, maintaining an Outperform rating despite the reduced price target. The investment community will be closely monitoring the upcoming data and trial design updates as they unfold.
In other recent news, Neurogene Inc. has announced significant progress in its gene therapy regulation technology, particularly with its EXACT™ transgene regulation technology, as detailed in a study published in Science Translational Medicine. This development has paved the way for a Phase 1/2 clinical trial for NGN-401, a gene therapy candidate targeting Rett syndrome. The therapy has received Fast Track and orphan drug designations from the FDA, which could expedite its development and review. In a broader industry context, Neurogene was among several biotech firms impacted by the recent resignation of Dr. Peter Marks from the FDA, a move that has raised concerns about potential shifts in the regulatory landscape. Marks’ departure has been viewed as a significant negative for the biotech sector, with implications for the regulatory processes established during the pandemic. Meanwhile, Stifel analysts have maintained a Buy rating for Neurogene, with a price target of $46.00, following the company’s fourth-quarter 2024 update. Neurogene’s financial position remains strong, with cash reserves expected to support operations into the second half of 2027, bolstering its ongoing research and development initiatives. The anticipated regulatory update for NGN-401 is scheduled for the first half of 2025, with additional clinical data expected later that year.
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