On Thursday, Athira Pharma Inc. (NASDAQ: ATHA) experienced a significant adjustment in its stock outlook. Mizuho Securities revised its rating on the company's shares, moving from "Outperform" to "Neutral."
This change comes in the wake of recent developments with the company's lead Alzheimer's disease treatment, fosgonimeton, also known as fosgo. The price target for Athira Pharma's stock has also been significantly reduced to $0.50, a steep decline from the previous target of $5.00.
The downgrade follows a series of announcements from Athira Pharma. Yesterday, the company revealed the termination of the fosgo program after disappointing results from the Phase 2/3 LIFT-AD study.
Additionally, Athira announced a strategic pivot towards ATH-1105, a drug aimed at treating ALS that is currently in Phase 1 trials, which Mizuho does not include in its financial models. Furthermore, the biopharmaceutical company has decided to reduce its workforce by 70%.
Mizuho Securities has adjusted its valuation model for Athira Pharma in light of these changes. The firm has adopted a discounted cash/share valuation methodology for the company, which resulted in the lowered price target.
The next significant milestone for Athira Pharma is anticipated to be the first top-line efficacy data for ATH-1105 in ALS, which is expected to be available in 2026. This future data point may provide an opportunity to re-evaluate the investment thesis for Athira Pharma, but for now, the firm maintains a "Neutral" rating on the stock.
In other recent news, Athira Pharma reported that its Phase 2 LIFT-AD study for fosgonimeton, a potential Alzheimer's disease treatment, failed to meet primary and secondary efficacy endpoints. However, the treatment was found to be safe and showed positive biomarker signals, suggesting potential for treating neurodegenerative diseases.
Despite these mixed results, analysts from Mizuho maintained an Outperform rating on Athira Pharma, while BTIG downgraded the company's stock from Buy to Neutral due to concerns over the drug's development path.
In addition to the LIFT-AD trial, Athira Pharma shared promising preclinical data at the Alzheimer’s Association International Conference 2024. The data suggests that fosgonimeton may reduce key Alzheimer’s disease-related protein pathology and protect neurons from amyloid-β toxicity.
In other developments, Athira Pharma has reached a preliminary settlement in a shareholder derivative lawsuit. The settlement includes the implementation of corporate governance reforms and the coverage of legal fees and expenses. These recent developments reflect Athira Pharma's ongoing commitment to advancing its pipeline of therapeutic candidates.
InvestingPro Insights
Amidst the challenging developments for Athira Pharma Inc. (NASDAQ: ATHA), real-time data from InvestingPro provides additional context for investors considering the company's financial health and market performance. With a market capitalization of $17.8 million, the company holds more cash than debt on its balance sheet, indicating some degree of financial stability despite its challenges. However, the company's price-to-earnings (P/E) ratio stands at -0.16, reflecting its current lack of profitability. Additionally, the stock's price has fallen to 10.77% of its 52-week high, with a previous close at $0.46, underscoring the significant depreciation in Athira Pharma's market value over the past year.
InvestingPro Tips suggest that Athira Pharma's stock is currently in oversold territory, as indicated by the Relative Strength Index (RSI), which may interest contrarian investors or those looking for a potential rebound. However, it is important to note that the company is quickly burning through cash, and analysts do not anticipate the company will be profitable this year. These factors, combined with weak gross profit margins and high price volatility, contribute to a cautious outlook for the stock.
For investors seeking a deeper analysis, there are additional InvestingPro Tips available on the platform, offering a comprehensive view of Athira Pharma's financial metrics and market performance. With these insights, investors can make more informed decisions aligned with their investment strategies.
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