Neumora stock holds Buy rating and $18 target from H.C. Wainwright

On Monday, H.C. Wainwright reaffirmed its Buy rating and $18.00 price target for Neumora Therapeutics (NASDAQ:NMRA), representing significant upside potential from the current price of $1.49. According to InvestingPro data, three analysts have revised their earnings upwards for the upcoming period, despite the stock’s challenging performance, having declined over 91% in the past year. The firm’s analyst, Douglas Tsao, provided insights following a recent development from a competitor in the pharmaceutical industry. Johnson & Johnson announced the discontinuation of its kappa opioid receptor antagonist (KORA), aticaprant, which was in development as an adjunctive therapy for major depressive disorder (MDD).

Tsao expressed that the decision by Johnson & Johnson does not significantly impact his perspective on Neumora’s navacaprant, which shares a similar mechanism of action. He noted that despite the surprising halt of aticaprant’s development, especially after Johnson & Johnson had been advancing the drug through aggressive development stages, this does not overshadow the potential of Neumora’s product.

Johnson & Johnson had initiated the VENTURA-5 and VENTURA-7 studies last year, indicating successful earlier trials. Furthermore, earlier in the year, the company had updated its R&D pipeline to include aticaprant as a planned New Drug Application (NDA) filing for 2025. These developments had previously bolstered investor sentiment around the KORA mechanism, particularly after navacaprant’s negative outcome in the KOASTAL-1 study.

The analyst pointed out that Johnson & Johnson’s positive signals regarding aticaprant had supported investor confidence in KORA mechanisms, including navacaprant. However, he anticipates that the recent news of aticaprant’s discontinuation may temporarily affect investor confidence in Neumora’s prospects.

Tsao’s commentary underscores a focus on Neumora’s differentiated pharmacology and the potential of navacaprant, despite the recent developments with Johnson & Johnson’s aticaprant. The reaffirmed Buy rating and price target suggest continued support for Neumora’s stock amid the evolving landscape of MDD treatment research.

In other recent news, Neumora Therapeutics reported its fourth-quarter 2024 financial results, beating earnings expectations with an adjusted loss per share of -$0.37 compared to analyst estimates of -$0.62. The company announced adjustments to its ongoing depression drug trials, KOASTAL-2 and KOASTAL-3, which are set to resume in March 2025. These changes come after the KOASTAL-1 study did not meet its primary endpoint, leading Neumora to enhance medical monitoring and focus on high-quality clinical sites. Neumora has also discontinued its Phase II trial in bipolar depression to allocate more resources to the KOASTAL program.

Stifel downgraded Neumora Therapeutics from Buy to Hold, reducing the price target from $6.00 to $2.00, following Johnson & Johnson’s decision to discontinue the phase 3 VENTURA program for aticaprant, which impacted the outlook for Neumora’s pipeline. Despite this, Guggenheim maintained a Buy rating with a price target of $7.00, highlighting the potential of Neumora’s KOASTAL program and other pipeline developments. Neumora anticipates topline data from KOASTAL-3 in the first quarter of 2026 and KOASTAL-2 in the second quarter of 2026.

Additionally, the company plans to advance its M4 PAM program into clinical trials by mid-2025. Neumora reported having $307.6 million in cash, cash equivalents, and marketable securities as of December 31, 2024, which is expected to fund operations into mid-2026. Research and development expenses increased to $200.9 million in 2024 from $142.7 million in 2023, primarily due to the advancement of navacaprant clinical trials.

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