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Neurogene shares target lifted, outperform on positive data

EditorNatashya Angelica
Published 12/11/2024, 11:54 pm
NGNE
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On Tuesday, Baird increased the stock price target for Neurogene (NASDAQ:NGNE) to $72 from the previous $54 while maintaining an Outperform rating on the company's stock. The adjustment follows Neurogene's announcement of promising interim clinical data for their gene therapy NGN-401, aimed at treating Rett syndrome. The analyst from Baird believes that the efficacy data presented is likely to be sufficient for regulatory approval.

The company's recent disclosure of initial interim clinical results has led Baird to raise the probability of NGN-401's approval to 40%, up from the prior estimate of 30%. This optimism stems from the current data suggesting a positive outlook for the therapy's success.

The analyst noted that the potential for further increase in the approval probability is contingent upon the resolution of a newly disclosed serious adverse event (SAE) associated with the high dose of the therapy and the confirmation of a favorable design for the registrational trial during the first half of 2025.

Neurogene's NGN-401 therapy is currently under clinical evaluation, and the reported data indicates a step forward in its development. The Baird analyst's comments reflect a cautious yet hopeful perspective on the drug's path to approval. The mention of a high dose SAE indicates a need for careful monitoring, but it does not seem to significantly dampen the analyst's outlook at this point.

The analyst also mentioned that the design of the upcoming registrational trial would play a critical role in the therapy's approval process. A favorable trial design, such as an open-label study using baseline as control, could further solidify the case for NGN-401's efficacy and safety, potentially leading to regulatory approval.

In conclusion, the increase in the price target for Neurogene by Baird is based on the interim clinical data for NGN-401, which suggests a positive trajectory towards approval for the treatment of Rett syndrome. The resolution of the high dose SAE and the details of the registrational trial design expected in the first half of 2025 will be key factors in the continued evaluation of NGN-401's approval chances.

In other recent news, Neurogene Inc. has reported promising earnings and revenue results, with a net loss of $18.5 million for the second quarter of 2024. Research and development expenses for the same period amounted to $15.7 million. In an important development, the company's gene therapy candidate, NGN-401, received the Regenerative Medicine Advanced Therapy designation from the FDA, which is expected to expedite the approval process.

H.C. Wainwright increased the price target for Neurogene to $55, maintaining a Buy rating on the company's stock. This followed the release of positive initial efficacy data for NGN-401, Neurogene's gene therapy aimed at treating Rett syndrome. BMO Capital and William Blair have also maintained an Outperform rating on Neurogene shares.

Neurogene recently secured approximately $200 million in an oversubscribed PIPE financing, which is expected to extend the company's financial runway into the second half of 2027. This funding is projected to support the completion of enrollment for the study of NGN-401.

In other developments, Neurogene announced positive interim clinical data from its ongoing Phase 1/2 trial of NGN-401. However, the company does not plan to advance its NGN-101 gene therapy program for CLN5 Batten disease, as the FDA denied its Regenerative Medicine Advance Therapy application.

Investors are closely watching the upcoming Phase 1/2 clinical data from the low-dose cohort of their NGN-401 study, and an update in the first quarter of 2025, which will include interim Phase 1/2 clinical data and a regulatory update for NGN-101.

InvestingPro Insights

The recent optimism surrounding Neurogene's NGN-401 therapy is reflected in the company's market performance. According to InvestingPro data, Neurogene has seen a remarkable 373.71% price total return over the past year, with a 44.71% increase in the last month alone. This surge has brought the stock to trade at 96.03% of its 52-week high, indicating strong investor confidence in the company's prospects.

However, it's important to note that Neurogene's financial metrics present a mixed picture. The company's P/E ratio stands at a high 264.67, suggesting that investors are pricing in significant future growth. This aligns with the InvestingPro Tip that Neurogene is "Trading at a high earnings multiple." Additionally, the company "Holds more cash than debt on its balance sheet," which could provide financial flexibility as it continues to develop its gene therapy pipeline.

Investors should be aware that Neurogene "Suffers from weak gross profit margins," which is typical for biotech companies in the development stage. This is evidenced by the negative gross profit of -52.05M USD for the last twelve months as of Q2 2024.

For those considering an investment in Neurogene, InvestingPro offers 18 additional tips that could provide further insights into the company's financial health and market position. These tips can be particularly valuable given the volatile nature of biotech stocks and the importance of thorough due diligence in this sector.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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