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On Wednesday, Stifel analysts increased their price target for GH Research PLC (NASDAQ:GHRS) shares to $32 from the previous target of $18, while maintaining a "Buy" rating. Despite a recent 16.5% weekly decline, the stock has shown remarkable strength with a 67% gain year-to-date. According to InvestingPro data, analyst consensus remains strongly bullish with targets ranging from $18 to $40. The adjustment follows the company’s announcement of positive phase 2b trial results for its GH001 therapy in treatment-resistant depression (TRD).
The analysts noted that the new price target reflects the efficacy and safety data from the recent trial. GH001 showed better-than-expected effectiveness, particularly in maintaining remission over time. Additionally, the safety profile was considered cleaner than anticipated, with no significant issues regarding flashback events and a possible trend towards reduced suicidal ideation in patients taking the drug compared to those on placebo. With a strong financial health score and current ratio of 15.8, InvestingPro analysis shows the company maintains robust liquidity to support its clinical development programs.
Despite the positive outcomes, Stifel acknowledged there are still challenges GH Research must address. These include resolving a clinical hold on the device used in the United States and finalizing a phase 3 program with the Food and Drug Administration (FDA). A key point of discussion with the FDA will likely be the requirements for a control arm in future trials.
Stifel’s optimism is partly based on the commercial potential of psychedelics in the treatment of TRD, citing the example of Spravato, which is generating over $1 billion in annual sales. The analysts believe that the phase 2b data supports the conclusion that GH001 is an effective treatment option and anticipate that the therapy could make a significant impact on the market for psychedelic treatments. With a market capitalization of $680 million and trading below its Fair Value according to InvestingPro’s analysis, GH Research presents an interesting opportunity in the emerging psychedelics space.
In other recent news, GH Research PLC announced significant results from its Phase 2b clinical trial for GH001, an inhalable treatment for treatment-resistant depression (TRD). The trial met its primary endpoint, demonstrating a notable reduction in the Montgomery-Åsberg Depression Rating Scale (MADRS) score on Day 8 post-treatment. Impressively, 57.5% of patients achieved remission on Day 8, compared to none in the placebo group, and 77.8% remained in remission at the six-month follow-up. The treatment was well tolerated, with no serious adverse events reported, and most patients were discharge-ready within an hour after the last dose.
Cantor Fitzgerald has given GH Research an Overweight rating with a $14 price target, citing the potential of GH001 to challenge the current market leader, SPRAVATO, due to its rapid antidepressant effect. H.C. Wainwright reiterated its Buy rating with a $40 target, emphasizing GH Research as a top pick for 2025 following the successful trial results. Rodman & Renshaw increased their price target to $42, maintaining a Buy rating, and highlighted the unprecedented trial results compared to existing treatments.
These recent developments have propelled GH Research’s stock, reflecting investor confidence in GH001’s potential to set a new standard in psychiatric treatment. The ongoing open-label extension phase of the trial continues to report positive outcomes, reinforcing the company’s trajectory toward future commercial success.
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