Merus shares rise as Needham lifts price target to $88

On Monday, Needham & Company updated its outlook on Merus N.V. (NASDAQ:MRUS), a clinical-stage immuno-oncology company, raising the price target from $75.00 to $88.00 while maintaining a Buy rating. This adjustment follows the presentation of updated data at the American Society of Clinical Oncology (ASCO) 2025 conference, which showcased the potential of Peto+Pembro as a new standard of care (SOC) in first-line Head and Neck Squamous Cell Carcinoma (HNSCC).

The one-year overall survival (OS) rate for Peto+Pembro was reported at 79%, significantly higher than the current SOC pembrolizumab monotherapy’s 44% and ficerafusp alfa’s 61%. This data suggests that Peto+Pembro could offer a meaningful median OS benefit. In the human papillomavirus-positive (HPV+ve) cohort, an additional response was observed, increasing the overall response rate (ORR) to 50% (4 out of 8 patients), which outperforms pembrolizumab’s 25% ORR in second-line treatment and is competitive with the 35.8-40% ORR demonstrated by drugs under development by competitors BioNTech (NASDAQ:BNTX) and PDS Biotechnology (NASDAQ:PDSB).

The updated data also revealed that Peto+Pembro’s profile in the HPV-negative (HPV-) cohort now appears competitive with Bicara Therapeutics’ treatment, with a one-year OS rate of approximately 79% compared to Bicara’s 61%. This improvement in efficacy metrics has led to increased confidence in the success of the ongoing Phase 3 trials.

Needham’s positive adjustment in the price target reflects a rise in the probability of success (POS) to 60% for Peto+Pembro, indicating a stronger conviction in the treatment’s prospects. The firm’s analysis points to the robustness of the updated data and its potential to position Peto+Pembro as a new SOC in the treatment of 1L HNSCC.

Investors responded to the news, with Merus shares experiencing an uptick following the announcement of the raised price target and the reaffirmed Buy rating by Needham. The company’s stock movement reflects the market’s optimism regarding the future commercial potential of Peto+Pembro in a competitive oncology landscape. InvestingPro analysis reveals the company maintains a strong financial position with more cash than debt and a healthy current ratio of 5.86. For deeper insights into Merus’s financial health and growth prospects, including 15 additional exclusive ProTips and comprehensive valuation metrics, investors can access the detailed Pro Research Report available on InvestingPro.

In other recent news, Merus N.V. has made significant strides in its clinical programs, capturing the attention of investors and analysts. BMO Capital Markets has raised its price target for Merus to $110, following the release of promising Phase 2 data for its drug candidate petosemtamab, used in combination with pembrolizumab for treating recurrent or metastatic Head and Neck Squamous Cell Carcinoma. This data revealed a confirmed Objective Response Rate of 63% and a 12-month Overall Survival rate of 79%, which is notably higher than the standard treatment. Meanwhile, Truist Securities maintained a Buy rating with a price target of $88, praising the same study’s results and expressing confidence in its standing against competitors. The company’s recent annual general meeting saw shareholders approve key proposals, including the adoption of the Dutch statutory annual accounts and the re-appointment of board members. Furthermore, Merus has published details on the mechanism of action for petosemtamab, highlighting its potential in colorectal cancer treatment. The ongoing Phase 3 trials are expected to be substantially enrolled by the end of the year, with additional data anticipated in the second half of 2025. These developments have positioned Merus as a focal point in the biopharmaceutical sector.

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