On Monday, Jefferies made a significant adjustment to its outlook on BioAge Labs Inc (NASDAQ:BIOA), downgrading the stock from Buy to Hold and slashing the price target to $7.00 from the previous $42.00. The stock, currently trading at $20.09 with a market capitalization of $720 million, appears overvalued according to InvestingPro analysis.
Despite the downgrade, the company maintains a GREAT financial health score, with notably strong liquidity metrics. This decision follows the company's announcement to discontinue the STRIDES Phase 2 study of Aze/tirze in obesity.
The discontinuation was prompted by the discovery of transaminase elevations in 11 subjects from the Aze groups, despite the absence of clinically significant symptoms or any indications of Hy's law. Notably, the stock has shown resilience, posting a 15% gain over the past week. Get deeper insights into BIOA's performance metrics and additional ProTips with an InvestingPro subscription.
The analyst pointed out that the liver signal was exclusively observed in the Aze groups, with no similar cases reported in the tirze arm. Although specific dose levels were not disclosed, it is suggested that both the combination and monotherapy were affected, as both were halted.
This update came as a surprise given that no safety concerns, particularly liver toxicity, were reported in the eight Phase 1 studies conducted by the company and AMGN, as well as various preclinical toxicity studies by AMGN that included durations of six to nine months in rats and dogs.
BioAge Labs had not previously encountered safety issues with Aze in genetic studies or earlier trials. In past trials, the highest dose of 300mg BID was only tested for a two-week period. The Phase 2 obesity study had subjects exposed to Aze at doses of 300mg QD or BID for a longer duration, with the timing of the liver signal not disclosed but the randomization for the study having begun in July 2024.
The analyst suggests that the liver issues could be related to the high dose and long-term exposure to Aze, but does not exclude other potential factors, such as interactions with tirze, patient baseline characteristics, among others.
In other recent news, BioAge Labs Inc has been the subject of positive outlooks from three major financial institutions. Citi initiated coverage on BioAge Labs with a Buy rating, highlighting the potential of the company's leading drug candidate, azelaprag, currently in a Phase 2 clinical trial for obesity treatment. Jefferies also initiated coverage with a Buy rating, citing the potential of azelaprag to generate approximately $1.8 billion in total peak adjusted revenue.
Morgan Stanley (NYSE:MS) initiated coverage with an Overweight rating, emphasizing BioAge's promising early data on weight loss and body composition improvements. Furthermore, all three firms noted the company's strategic partnership with pharmaceutical titan Eli Lilly (NYSE:LLY) as a crucial part of BioAge's strategy.
These recent developments underscore the robust validation of BioAge's research and development efforts. The results from the ongoing trials are anticipated in the third quarter of 2025 and the second half of 2026, respectively. The interest in the obesity treatment landscape among pharmaceutical companies also leads Citi to consider BioAge Labs as a possible target for mergers and acquisitions, should the drug's proof-of-concept be successful.
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