Merus stock holds $85 target, Buy rating at H.C. Wainwright

On Tuesday, H.C. Wainwright maintained a Buy rating on Merus N.V. (NASDAQ:MRUS) shares, with a steady price target of $85.00. Currently trading at $55.14 with a market capitalization of $3.8 billion, Merus has attracted strong analyst interest. According to InvestingPro data, analyst targets range from $59 to $110, suggesting significant upside potential. The company maintains a robust financial position, with more cash than debt on its balance sheet. The firm’s analyst, Andrew Fein, provided insights into the company’s recent clinical update regarding the combination of petosemtamab and pembrolizumab in the treatment of 1L PD-L1+ recurrent/metastatic Head and Neck Squamous Cell Carcinoma (HNSCC).

Fein highlighted the treatment’s performance, which met all pre-specified efficacy benchmarks. The updated data, with a median follow-up of 14.3 months, revealed a confirmed Overall Response Rate (ORR) of 63% (27 out of 43 patients). This result aligns with the previously projected range of 60-65% and is consistent with the 67% interim ORR reported in March 2024. The analyst emphasized the depth and durability of the responses, including six complete responses and over one-third of the responders still undergoing treatment.

The treatment’s effectiveness was consistent across various biomarker subgroups. In patients with a Combined Positive Score (CPS) of 1-19, the ORR was 47%, and it was even higher at 73% for those with a CPS of 20 or above. Furthermore, the therapy showed promising signs of benefit in patients with HPV-associated cancers, with half of the evaluated patients responding.

From a survival perspective, the treatment exceeded expectations. The 12-month Overall Survival (OS) rate was an impressive 79%, surpassing the 51% associated with pembrolizumab monotherapy in the KEYNOTE-048 study and exceeding the 65-70% threshold identified by Fein as indicative of potential regulatory success. Additionally, the median Progression-Free Survival (PFS) was 9.0 months (95% Confidence Interval: 5.2-12.9), which is at the high end of the projected 8-10 months range.

Fein pointed out that while PFS is not a registrational endpoint, the prolonged disease control and response durability are likely to encourage market adoption, especially considering that pembrolizumab monotherapy typically results in only 2.8-3.2 months of median PFS. The analyst concluded by reiterating the Buy rating and the $85 price target for Merus N.V. stock. The company has demonstrated impressive momentum, with InvestingPro data showing a 25.29% return over the past week and a year-to-date return of 31.13%. While the stock appears slightly overvalued based on InvestingPro’s Fair Value analysis, the company maintains strong liquidity with a current ratio of 5.86. Investors seeking deeper insights can access comprehensive analysis and 15 additional ProTips through InvestingPro’s detailed research report, which provides valuable context for biotechnology investments.

In other recent news, Merus N.V. has been the focus of several analyst updates and company developments. BMO Capital Markets raised its price target for Merus to $110, up from $96, while maintaining an Outperform rating. This decision follows promising Phase 2 data for Merus’s drug candidate, petosemtamab, in combination with pembrolizumab, which showed a 63% objective response rate and a 12-month overall survival rate of 79%. Similarly, Needham & Company increased its price target from $75 to $88, maintaining a Buy rating, after updated data suggested that the Peto+Pembro regimen could become a new standard of care for Head and Neck Squamous Cell Carcinoma.

Truist Securities also reaffirmed its Buy rating with a price target of $88, expressing optimism based on Merus’s recent data presentations and management discussions. Additionally, Merus’s annual general meeting saw shareholders approve several key proposals, including the reappointment of board members and the adoption of the Dutch statutory annual accounts for 2024. The meeting reflected strong shareholder support, with approximately 89.20% of outstanding shares represented.

These recent developments highlight Merus’s ongoing progress in its clinical programs and strategic direction, garnering positive attention from investors and analysts alike.

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