On Tuesday, JPMorgan adjusted its stance on Biomea Fusion Inc. (NASDAQ:BMEA), downgrading the stock from Overweight to Neutral and slashing the share price target significantly to $14.00 from the previous $51.00.
The decision comes after reviewing the company's fourth-quarter results, which included a per-share loss of $0.98, and the early data from the COVALENT-112 study concerning BMF-219, a potential treatment for Type 1 diabetes (T1D).
The initial data from the study, which involved a small patient sample of just two individuals, presented challenges in interpretation due to varying baseline histories and on-treatment follow-up by dose strength and duration. Although there was a reported increase in the C-peptide index AUC ranging from +12% to +40% over weeks four to eight, JPMorgan noted the lack of baseline C-peptide indices, making it difficult to determine the clinical significance of these changes.
Further complicating the outlook for BMF-219 is the mixed data from the COVALENT-111 study for Type 2 diabetes (T2D), which indicated a loose correlation between the drug's pharmacokinetics and HbA1c levels but raised questions regarding dose responsiveness. This has led to skepticism about the drug's mechanism of action, its durability, and the size of the patient population it may serve.
JPMorgan anticipates that answers to the outstanding questions surrounding BMF-219 will not be available until the second half of 2024. Additionally, the firm highlighted concerns about Biomea Fusion's financial runway, which is estimated to last less than 12 months, as noted in the company's 2023 10-K filing with a going concern.
The analyst also pointed out that Biomea Fusion's acute myeloid leukemia (AML) program is trailing behind its competitors, with the selection of a recommended phase 2 dose (RP2D) expected later in the year.
Given these factors, JPMorgan expects Biomea Fusion's stock to trade within a tight range in the near to midterm, prompting the downgrade to a Neutral rating.
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