On Tuesday, BMO Capital maintained a positive outlook on Neurogene (NASDAQ:NGNE), reiterating an Outperform rating and a price target of $60.00. The firm's analyst provided an update on the company's recent developments, which included several key points regarding Neurogene's clinical program for NGN-401.
The analyst noted that the serious adverse event (SAE) previously reported in a patient who received a high dose of NGN-401 has been identified as a systemic hyperinflammatory syndrome. This condition is known to be associated with high-dose adeno-associated virus (AAV) dosing. Consequently, Neurogene has decided to terminate the high-dose cohort of their study, which involved a dosage of 3E15 vg.
Despite this setback, the company plans to continue enrolling patients at a lower dose of 1E15 vg, following a review of the data by the Food and Drug Administration (FDA). The enrollment is expected to be completed in 2025, as the study's protocol has been amended to exclude the high-dose administration.
The BMO Capital analyst expressed unchanged long-term confidence in the potential for the low dose of NGN-401 to demonstrate efficacy without crossing the toxicity threshold. However, in the near term, the analyst indicated that the key risk factor for Neurogene is the health update on the patient who experienced the SAE, as well as the FDA's subsequent response to this event.
In other recent news, Neurogene reported encouraging earnings and revenue results, with a Q2 2024 net loss of $18.5 million and R&D expenses amounting to $15.7 million. The firm also secured approximately $200 million in oversubscribed PIPE financing, expected to extend its financial runway into the second half of 2027. These funds will support the completion of enrollment for the study of NGN-401, Neurogene's investigational therapy for Rett syndrome.
Analysts from BMO Capital, Stifel, Baird, and H.C. Wainwright have adjusted their price targets for Neurogene. BMO Capital reduced its price target to $60 from $65, maintaining an Outperform rating. Stifel increased its price target to $60 from $44, maintaining a Buy rating. Baird lifted its price target to $72 from $54, and H.C. Wainwright raised its price target to $55 from $49, both firms sustaining an Outperform and Buy rating respectively.
NGN-401 demonstrated efficacy and favorable safety at the lower dose in a small cohort of four patients. However, the higher dose was associated with a treatment-related adverse event. The design of registrational endpoints and pivotal trials for NGN-401 is yet to be determined, with updates expected in the first half of 2025.
Neurogene's NGN-401 received the Regenerative Medicine Advanced Therapy designation from the FDA, which is expected to expedite the approval process. Nevertheless, 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.
InvestingPro Insights
Recent InvestingPro data and tips provide additional context to Neurogene's (NASDAQ:NGNE) current situation. The company's stock has experienced significant volatility, with InvestingPro data showing a 50.45% decline in the past week and a 63.57% drop over the last month. This aligns with the InvestingPro Tip indicating that the "stock has taken a big hit over the last week."
Despite these recent setbacks, Neurogene maintains a strong financial position. An InvestingPro Tip notes that the company "holds more cash than debt on its balance sheet," which could provide a buffer as it navigates the challenges in its clinical program. However, another tip cautions that Neurogene is "quickly burning through cash," which investors should monitor given the ongoing clinical trials and potential adjustments to the study protocol.
The current market cap of $234.4 million and a high P/E ratio of 77.16 suggest that investors still have expectations for future growth, despite the recent clinical setback. For those interested in a more comprehensive analysis, InvestingPro offers 11 additional tips for Neurogene, providing a deeper understanding of the company's financial health and market position.
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