MW This biotech's stock could double if its treatment for major depressive disorder succeeds, says Mizuho
By Ciara Linnane
It's been 30 years since a novel mechanism of action was approved for the debilitating illness
Mizuho reiterated its bullish stance on biotech Neumora Therapeutics Inc. on Wednesday, and predicted a positive outcome when the company reports data from a late-stage trial of its treatment for major depressive disorder, or MDD, later this year.
Watertown, Mass.-based Neumora $(NMRA)$, a clinical-stage biotech that went public in September of 2023, specializes in treatments for central nervous system diseases. Its pipeline includes treatments for bipolar depression, agitation in Alzheimer's disease, schizophrenia and Parkinson's disease.
The company's lead product candidate, navacaprant, aims to treat MDD, the leading cause of disability worldwide, according to research conducted by L.E.K. Consulting.
An estimated 280 million people around the world suffer from MDD, 21 million of whom are resident in the U.S. It's been 30 years since a novel mechanism of action was approved, creating a high unmet need.
Mizuho counts outperform-rated Neumora as a top pick in biotech with the company expected to report the first data from a Phase 3 trial dubbed Koastal-1 by year-end.
"With K-1 representing the first of three Phase 3 studies evaluating navacaprant in MDD (the second and third being the KOASTAL-2/K-2 and KOASTAL-3/K-3 studies, both reading out in 1H25), we're bullish on the prospects of positive outcome, with key opinion leaders/KOLs (key opinion leaders) we've spoken with generally optimistic on navacaprant's chances for success," analyst Graig Suvannavejh wrote in a note to clients Wednesday.
Navacaprant is a novel kappa opioid receptor antagonist, where kappa opioid receptors are targets for anhedonia that are expressed in brain circuits regulating reward, motivation, stress, and anxiety. Anhedonia is a condition where a patient feels a lack of interest, enjoyment or pleasure and is a common side effect of MDD.
The drug already proved effective in a Phase 2 trial and did not demonstrate any of the unpleasant side-effects, such as weight gain or sexual dysfunction, that other depression treatments can cause, leading patients to stop taking them.
Mizuho would like to see a placebo-adjusted primary endpoint of MADRS hitting between 2 to 4 points, said Suvannavejh, ideally on the higher end as the drug is being evaluated in a monotherapy setting.
MADRS, or Montgomery-Åsberg Depression Rating Scale, is the main one used to measure the severity of depressive episodes.
Mizuho would also like to see a continued benign safety profile, especially for the above-mentioned side effects, along with suicidal behavior.
"That said, while not guiding to any specifics on the data, NMRA management has indicated to us that it would like to simply see statistical significance and an overall safe profile," the analyst wrote.
If approved, the drug is expected to achieve peak year revenue of $2.9 billion, Mizuho estimates.
Neumora reported third-quarter earnings late Tuesday. With no approved drugs yet, the company is pre-revenue and loss-making. But it ended the quarter with $341 million in cash and cash equivalents, allowing it to fund its operating plan through mid-2026.
Beyond MDD, Neumora is developing navacaprant as a treatment for bipolar depression, and is in the midst of a Phase 2 trial with data expected in the second half of 2025.
The stock was last down 3.9% at just over $10. Mizuho's stock price target is $20.
-Ciara Linnane
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November 13, 2024 11:03 ET (16:03 GMT)
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