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Investing.com - Needham lowered its price target on Mereo BioPharma Group (NASDAQ:MREO) to $5.00 from $7.00 on Thursday, while maintaining a Buy rating on the stock. Currently trading at $2.94, MREO maintains strong analyst support with consensus targets ranging from $6.01 to $10.02, according to InvestingPro data.
The price target reduction follows an announcement that the Phase III Orbit study for setrusumab will continue toward a final analysis expected in the fourth quarter of 2025 after missing its second interim milestone.
Needham indicated this outcome represents its downside scenario for the company, noting that the stock would likely face pressure following the news.
Despite the setback, the research firm maintained its overall positive view on setrusumab’s ultimate likelihood of success, citing that approximately 80% of the alpha spend is reserved for the final analysis.
Needham’s continued confidence is supported by the established relationship between increases in bone mineral density (BMD) and reduction in fracture rates over time, though the firm acknowledged increased uncertainty and adjusted potential launch timing in its revised valuation.
In other recent news, Mereo BioPharma Group and Ultragenyx Pharmaceutical (NASDAQ:RARE) have announced that their Phase 3 Orbit study for UX143 (setrusumab) in patients with osteogenesis imperfecta is progressing to final analysis. The Data Monitoring Committee has confirmed that setrusumab demonstrates an acceptable safety profile, prompting the continuation of the study rather than an early stoppage. This decision follows interim data that did not meet the criteria for early conclusion, and final results are anticipated around the end of 2025. Despite this development, JPMorgan has reiterated its Overweight rating on Mereo BioPharma with a price target of $7.00, maintaining a positive outlook based on prior data and the longer follow-up period. The Orbit study involves pediatric and young adult patients, with a primary endpoint focused on the annualized clinical fracture rate. Meanwhile, the companion Cosmic study, which involves younger patients, will also proceed to final analysis. Both studies require patients to be on therapy for at least 18 months before the final analysis is conducted. These developments follow a press release included in a recent SEC filing, highlighting the ongoing commitment to addressing the needs of patients with this rare genetic disorder.
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