On Friday, Jefferies made a significant adjustment to the price target for Keros Therapeutics (NASDAQ:KROS), bringing it down to $23.00 from the previous $113.00. The news contributed to the stock's dramatic 73.67% decline over the past week, though according to InvestingPro data, the stock's RSI suggests oversold conditions.
Despite this change, the firm has maintained its Buy rating on the biotechnology company's stock.
The revision follows a recent development where Keros Therapeutics decided to discontinue two higher doses of its drug candidate, cibotercept, in a Phase 2 trial for Pulmonary Arterial Hypertension (PAH) due to adverse events related to the pericardium.
The adverse events leading to the discontinuation of the higher doses were not observed in earlier stages of research involving preclinical studies and healthy volunteers. The company has stated it will provide further updates and still anticipates topline results from the ongoing trial in the second quarter of 2025.
InvestingPro data shows Keros maintains a strong financial position with more cash than debt and a healthy current ratio of 19.03, providing runway for continued development. The trial will proceed with the lower dose of 1.5mg/kg, which has previously shown target engagement in healthy patients, indicating that there is still a possibility of efficacy.
Jefferies has also adjusted the probability of success (PoS) for cibotercept to 10% from the previous estimate of 35%. This revised PoS reflects the uncertainties following the discontinuation of the higher doses and how the drug's efficacy will compare to existing treatments, such as Winrevair. The new $23.00 price target is based on these revised expectations for the drug's potential market performance and regulatory success. Despite recent challenges, the broader analyst consensus remains positive with a 1.6 rating (where 1 is Strong Buy), with price targets ranging from $44 to $113. Discover more insights and 12 additional ProTips for KROS on InvestingPro.
In other recent news, Keros Therapeutics has experienced significant developments. The biotechnology company's shares were downgraded from Buy to Hold by TD Cowen due to concerns over halted dosing in certain arms of its clinical trial. This downgrade was echoed by BTIG, which shifted its rating from Buy to Neutral after a safety update on a clinical trial.
Simultaneously, Keros Therapeutics entered a substantial licensing agreement with Takeda Pharmaceutical Company (NYSE:TAK), focusing on the development of elritercept. This agreement includes an upfront payment of $200 million to Keros and could potentially reach $1.1 billion in milestone payments. This development was positively received by analyst firms including Guggenheim, BofA Securities, and Jefferies.
Additionally, the company recently completed patient enrollment for its Phase 2 TROPOS trial, studying the potential of cibotercept in treating pulmonary arterial hypertension. Top-line data from this trial is expected in 2025. In terms of leadership changes, Keros Therapeutics recently appointed Dr. Yung H. Chyung as its new Chief Medical (TASE:PMCN) Officer, a strategic move as the company prepares for significant clinical milestones.
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