On Monday, Oppenheimer adjusted its price target for shares of Keros Therapeutics (NASDAQ:KROS), a clinical-stage biopharmaceutical company, to $63.00, down from the previous $102.00. Despite the reduction, the firm maintained its Outperform rating on the stock.
Currently trading at $18.83, the stock sits well below analyst targets ranging from $23 to $105, with a strong buy consensus rating of 1.5 out of 5. This decision follows recent developments in the company's clinical trials.
Keros Therapeutics recently announced on December 12, 2024, that it would cease dosing in the mid-to-high dose cohorts of its Phase 2 TROPOS study for the drug cibotercept. This was due to challenges in differentiating the drug's efficacy and safety profile from that of a competing drug, sotatercept.
The market reacted sharply to this news, with Keros shares plummeting exactly 71.95% over the past week, according to InvestingPro data, while the broader biotech sector, measured by XBI, saw a decline of about 2%. The stock's RSI indicates oversold conditions, suggesting potential for a technical rebound.
Despite this setback, Oppenheimer suggests that the market's reaction might be premature. After consulting with medical experts, the firm sees a viable path forward for cibotercept at lower doses.
The continued dosing at 1.5 mg/kg is expected to potentially match the efficacy of sotatercept, without the associated risks of hemoglobin increases and bleeding. The experts also indicated that pericardial effusion, a condition observed in the study, could be linked to patients with autoimmune connective tissue diseases, which adds complexity to the drug's development.
The revised price target reflects updated assumptions about the drug's market penetration by 2032, which has been halved from approximately 17% to around 8%. Additionally, Oppenheimer's valuation considers the contributions from elritercept for myelodysplastic syndromes and myelofibrosis, which are estimated to be around $23 per share of the price target.
Moreover, the pro forma cash position of Keros, bolstered by a $200 million upfront payment from a deal with Takeda, remains strong with a current ratio of 19.03, indicating ample liquidity to fund operations. The potential of KER-065 for obesity treatment, which is expected to have Phase 1 data available in the first quarter of 2025, are also factored into the calculation.
These elements serve as placeholders in Oppenheimer's assessment of Keros Therapeutics' valuation. For deeper insights into Keros's financial health and valuation metrics, including 15 additional ProTips and comprehensive financial analysis, consider subscribing to InvestingPro.
In other recent news, Keros Therapeutics has experienced significant adjustments in market expectations. Analyst firm H.C. Wainwright maintained a Buy rating for the company but reduced the price target from $100 to $47, following the company's announcement of a halt in dosing in two arms of its Phase 2 TROPOS trial for the treatment of pulmonary arterial hypertension (PAH) with its drug cibotercept.
The decision was echoed by other analysts, with Jefferies revising the company's share target from $113 to $23 and TD Cowen and BTIG downgrading their ratings from Buy to Hold and Neutral respectively.
Simultaneously, Keros Therapeutics entered a substantial licensing agreement with Takeda Pharmaceutical (TADAWUL:2070) Company (NYSE:TAK) for the development of elritercept, a development positively received by Guggenheim, BofA Securities, and Jefferies. The company also completed patient enrollment for its Phase 2 TROPOS trial and appointed Dr. Yung H. Chyung as its new Chief Medical (TASE:PMCN) Officer.
These recent developments reflect Keros Therapeutics' ongoing efforts to advance its drug candidates and strengthen its financial position. The company anticipates topline data for all treatment arms in the second quarter of 2025, and will provide updates as necessary.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.