Neumora stock rating cut to Market Perform at William Blair

Monday, shares of Neumora Therapeutics (NASDAQ:NMRA) were downgraded by William Blair from Outperform to Market Perform following recent industry developments. The stock, which has declined nearly 92% over the past year according to InvestingPro data, currently trades around $1.49, significantly below its 52-week high of $21. The downgrade was prompted by the discontinuation of Johnson & Johnson’s (NYSE:JNJ) VENTURA clinical program for aticaprant, a kappa opioid receptor (KOR) antagonist intended as an adjunctive treatment for major depressive disorder (MDD).

The decision by Johnson & Johnson to halt the aticaprant program was due to its insufficient efficacy in the target patient population. This marks the second notable failure for the KOR antagonist mechanism in MDD, with Neumora’s own KOR antagonist failing to show significant effectiveness in its KOASTAL-1 study.

Neumora’s management had attributed the KOASTAL-1 study’s failure to trial conduct issues, as MDD studies are notoriously difficult to execute. However, with two high-profile setbacks for the KOR antagonism mechanism, which was central to the investment thesis, confidence in this approach for treating MDD has waned.

As a result of these industry challenges, the probability of success for KOR antagonism in MDD within the United States has been lowered to 5% in William Blair’s model. This reassessment has led to the lowered stock rating for Neumora Therapeutics, as the firm recalibrates its expectations for the company’s prospects in light of these recent events. According to InvestingPro, which offers comprehensive analysis through its Pro Research Reports covering 1,400+ stocks, the company’s financial health score remains weak, with analysts not anticipating profitability this year. However, InvestingPro’s Fair Value analysis suggests the stock may be undervalued at current levels.

In other recent news, Neumora Therapeutics reported its fourth-quarter 2024 financial results, exceeding earnings expectations with an adjusted loss per share of -$0.37, compared to the anticipated -$0.62. The company announced a temporary pause and planned optimizations for its KOASTAL-2 and KOASTAL-3 studies for the drug navacaprant, with plans to resume in March 2025. Neumora also decided to discontinue its Phase II trial in bipolar depression to focus resources on its KOASTAL program. Guggenheim maintained a Buy rating on Neumora with a price target of $7.00, highlighting the company’s ongoing efforts to optimize its clinical trials. H.C. Wainwright reaffirmed its Buy rating and $18.00 price target, indicating continued support despite recent developments in the industry. However, Stifel downgraded Neumora from Buy to Hold, significantly lowering the price target to $2.00, reflecting concerns following Johnson & Johnson’s discontinuation of its aticaprant program. The changes in trial strategies and analyst opinions underscore the evolving landscape for Neumora’s drug development efforts in major depressive disorder. Neumora reported $307.6 million in cash and marketable securities, expected to fund operations into mid-2026, with increased R&D expenses primarily due to advancing navacaprant trials.

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