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Friday, Guggenheim Securities downgraded Neumora Therapeutics (NASDAQ: NMRA) stock from Buy to Neutral, in the wake of recent developments in the pharmaceutical industry. The downgrade followed an announcement by Johnson & Johnson (JNJ) on Thursday that it would discontinue its Phase 3 VENTURA program, which was testing aticaprant as an adjunctive treatment for major depressive disorder (MDD) due to insufficient efficacy.
The analyst at Guggenheim cited the failure of aticaprant in MDD, alongside Neumora’s own KOASTAL-1 (K-1) failure with navacaprant (KORA), as reasons for the downgrade. These setbacks have led to a reduction in confidence regarding the mechanism of action (MoA) for these drugs in treating MDD. As a result of these clinical disappointments, Guggenheim has also removed their price target (PT) for Neumora Therapeutics. Despite these industry setbacks, JNJ’s stock has shown resilience, trading near its 52-week high with characteristically low price volatility. For deeper insights into pharmaceutical industry leaders and their market performance, consider exploring InvestingPro’s comprehensive research reports covering 1,400+ top stocks.
In their analysis, Guggenheim suggested that Neumora Therapeutics should consider discontinuing the KOASTAL program to preserve capital. They recommended that the company should instead focus on strengthening its pipeline by reallocating resources. This strategic shift is seen as a potential path forward for the company in light of the recent clinical trial outcomes.
Neumora’s current cash position is approximately $300 million, which equates to around $1.75 per share. The analyst expressed limited confidence in the potential success of navacaprant in MDD, especially after the recent amendments to the K-2 and K-3 studies, which are not expected to significantly impact the clinical outcome. The recommendation to discontinue the KOASTAL program reflects a broader concern for the company’s direction following the unsuccessful trials.
In other recent news, Johnson & Johnson has completed a multi-billion euro public offering of notes, including various maturities and interest rates, aimed at general corporate purposes such as refinancing debt or funding acquisitions. Additionally, the company has issued $5 billion in new notes as part of its capital management strategy, with proceeds potentially supporting ongoing operations or future growth. S&P Global Ratings assigned an ’AAA’ rating to these notes but placed them on CreditWatch with negative implications, partly due to Johnson & Johnson’s acquisition of Intra-Cellular Therapies (NASDAQ:ITCI) Inc. for approximately $14.6 billion. This acquisition is expected to increase the company’s adjusted leverage temporarily, although it is anticipated to decrease by the end of 2026.
In the healthcare sector, Johnson & Johnson is noted by BTIG’s Jonathan Krinsky as nearing a breakout, reflecting positive momentum within the sector. Furthermore, the company’s drug TREMFYA® has shown promise in treating ulcerative colitis, with Phase 3 study results indicating significant improvements over placebo. The drug’s application for approval in Europe is underway, with FDA approval already secured for intravenous induction. These developments highlight Johnson & Johnson’s ongoing strategic activities and its position within the healthcare industry.
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