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On Wednesday, BTIG analysts maintained a Buy rating on Mereo BioPharma Group (NASDAQ:MREO) with a steady price target of $6.00. The firm’s analysts pointed to the recent decline in the company’s stock value, which has dropped by 35% year-to-date compared to the 5% decrease in the XBI biotech index, as a potential opportunity for investors. According to InvestingPro data, MREO shares are currently trading near their 52-week low of $2.25, with a significant 43% decline over the past six months. The stock’s current analyst consensus is strongly bullish, with price targets ranging from $6.36 to $10.60. This perspective comes in anticipation of forthcoming results from Mereo’s Phase 3 ORBIT trial for the treatment of osteogenesis imperfecta (OI), a genetic bone disorder affecting individuals aged 5 to 25 years.
Setrusumab, Mereo BioPharma’s investigative therapy for OI, has previously shown promising safety and efficacy in a Phase 2b trial, with positive results sustained for approximately 16 months. Analysts at BTIG have expressed confidence in the drug’s potential, assigning a high 90% probability of success for setrusumab in treating OI. The next significant milestone for the company is the second interim analysis of the ORBIT trial, which is expected to occur in mid-2025. This analysis will focus on a 12-month follow-up, with results being disclosed if the fracture benefit exceeds a p-value of less than 0.01. The final analysis, based on an 18-month follow-up and a p-value threshold of less than 0.039, is scheduled for the fourth quarter of 2025.
Furthermore, data from the COSMIC trial, an ongoing open-label Phase 3 study in younger patients aged 2 to less than 7 years, is expected to be assessed and likely reported in conjunction with the ORBIT trial results. Mereo BioPharma has significant financial interest in setrusumab, including tiered double-digit royalties on U.S. net sales, the majority of rights in Europe, and up to $245 million in potential milestone payments. InvestingPro subscribers can access 12 additional key insights about MREO’s financial health and market position, along with comprehensive Pro Research Reports that provide deep-dive analysis of the company’s prospects.
The management team at Mereo BioPharma has already initiated pre-commercial activities in preparation for a potential launch of setrusumab, as well as continued discussions regarding partnership opportunities for alvelestat, another drug in their pipeline. The company reported ending the fiscal year 2024 with $69.8 million in cash and equivalents, which they anticipate will fund operations into 2027. InvestingPro analysis shows the company maintains a strong current ratio of 6.1 and holds more cash than debt on its balance sheet, though it remains unprofitable with an EBITDA of -$37.48 million in the last twelve months. BTIG reiterated their Buy recommendation based on these factors.
In other recent news, Mereo BioPharma Group has maintained its Overweight rating and a $7.00 price target from Cantor Fitzgerald. The analysts at Cantor Fitzgerald have expressed confidence in the potential of Mereo BioPharma’s drug, which is currently undergoing the IA2 trial. The drug is noted for its effectiveness in preventing fractures from falls or accidents, and even if the trial does not meet its primary endpoint, a 30-35% reduction in fractures could still be considered clinically meaningful. The management of Mereo BioPharma remains optimistic about the drug’s prospects, highlighting its benefits on Patient-Reported Outcomes and other measures.
Additionally, Cantor Fitzgerald analysts have highlighted key insights from a webinar with the Osteogenesis Imperfecta Foundation that could impact both Ultragenyx (NASDAQ:RARE) and Mereo BioPharma. The discussion focused on setrusumab, a treatment in Phase 3 trials jointly developed by the two companies. The analysts emphasized their positive outlook on setrusumab’s potential to provide a new treatment option for patients with Osteogenesis Imperfecta. The second interim analysis for setrusumab is anticipated in mid-2025, which could expedite its approval process if the data is favorable. Both Ultragenyx and Mereo BioPharma are considered top picks by Cantor Fitzgerald, underscoring the potential impact of these developments on the companies.
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