On Thursday, Mizuho (NYSE:MFG) Securities adjusted its stance on Relmada Therapeutics Inc (NASDAQ:RLMD), downgrading the stock from Outperform to Neutral and slashing the price target significantly to $1 from the previous $23.
The market reaction was severe, with the stock plummeting 78% in the past week to $0.63, barely above its 52-week low of $0.62. This decision was made in light of new developments from the company's REL-1017 RELIANCE II Phase 3 trial for major depressive disorder (MDD).
The Data Monitoring Committee (DMC) evaluated the interim sample size re-estimation for the trial and, contrary to expectations of no or modest sample size expansion, determined the study to be futile. This outcome was unexpected, especially after the protocol amendments and enhanced trial oversight that were instituted to increase the likelihood of a successful outcome.
The DMC's finding of futility suggests a bleak future for REL-1017 as a treatment for MDD. The analyst from Mizuho expressed disappointment at this turn of events, which led to the downgrade of Relmada Therapeutics' stock rating and the dramatic reduction in the price target. According to InvestingPro, the company's market capitalization has shrunk to just $19 million, though it maintains a healthy current ratio of 6.89, indicating strong short-term liquidity.
The impact of this decision reflects the analyst's revised expectations for the company's drug development prospects. The substantial decrease in the price target from $23 to $1 encapsulates the diminished confidence in REL-1017's path forward in treating MDD.
Relmada Therapeutics, a company focused on developing novel treatments for central nervous system diseases, now faces a significant hurdle as it reassesses its strategy following the DMC's futility finding. The market's reaction to Mizuho's downgrade and price target adjustment will be closely watched by investors and industry stakeholders alike.
InvestingPro data shows the stock is currently in oversold territory, with 13 additional real-time insights available to subscribers, including detailed financial health metrics and growth indicators.
In other recent news, Relmada Therapeutics experienced significant developments. Leerink Partners downgraded its rating on the company from Outperform to Market Perform following disappointing interim analysis results from the REL-1017 study for Major Depressive Disorder (MDD).
The Data Monitoring Committee (DMC) found the drug futile in the RELIANCE II study, marking a setback for the firm. Despite this, Relmada maintains a strong financial position, with $54 million in cash reserves reported at the end of the third quarter of 2024.
Relmada is continuing its development of another product, REL-P11, currently in Phase 1 trials. The company also reported a decrease in cash and investments to $54.1 million and a net loss of $21.7 million in its Q3 financials. Research and development expenses have risen to $11.1 million, funding ongoing studies including a Phase 1 safety study for a psilocybin-based candidate.
These recent developments indicate a shift in the company's outlook, with the downgrade reflecting the impact of the interim analysis results. However, the firm's commitment to the development of REL-P11 and its strong financial position suggest continued progress in its research and development efforts.
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