On Wednesday, H.C. Wainwright adjusted its outlook on shares of Minerva Neurosciences (NASDAQ:NERV), reducing the stock's price target to $5.00 from the previous $7.00 while keeping a Neutral rating. This adjustment follows Minerva's second-quarter results and corporate update on Tuesday.
The company is currently in discussions regarding a complete response letter (CRL) it received from the FDA, which highlighted the need for more data to prove the effectiveness of its drug, roluperidone, intended for treating negative symptoms in schizophrenia patients.
The FDA's CRL pointed out that the current New Drug Application (NDA) for roluperidone does not have enough evidence to demonstrate substantial effectiveness. It also specified that the 64 mg dose requires further patient exposure of at least 12 months. The regulatory agency has mandated that Minerva conduct an additional study to substantiate the safety and efficacy of the drug.
Minerva reported having $31 million in cash at the end of the second quarter, which suggests that the company would require extra capital to finance the necessary study. Earlier in the first quarter, Minerva completed a Phase 1b clinical trial assessing the safety and pharmacokinetics/pharmacodynamics (PK/PD) of roluperidone and olanzapine in patients with moderate-to-severe negative symptoms of schizophrenia.
The trial, which involved 13 patients over 17 days, did not present new safety concerns or symptomatic worsening, even when roluperidone was administered alongside olanzapine.
However, since the Phase 1b study was concluded prior to receiving the FDA's CRL, there remains uncertainty about whether this trial sufficiently addresses the FDA's concerns regarding the co-administration of roluperidone with other antipsychotics.
The possibility of securing additional funding or a strategic partnership has been hinted at, noting that Boehringer Ingelheim is a shareholder. Due to these ongoing uncertainties and the apparent need for extra funding, H.C. Wainwright has decided to lower the price target while maintaining a Neutral stance on Minerva Neurosciences.
InvestingPro Insights
As Minerva Neurosciences (NASDAQ:NERV) navigates the challenges posed by the FDA's request for additional data on roluperidone, investors are closely monitoring the company's financial health and stock performance.
According to InvestingPro data, Minerva's market capitalization stands at a modest $20.56 million, reflecting the market's current valuation of the company. Despite the challenges, InvestingPro Tips suggest that Minerva's liquid assets are sufficient to cover its short-term obligations, which may provide some financial flexibility as it seeks to address the FDA's concerns.
However, analysts are not optimistic about the company's profitability in the near term, and the stock has experienced significant volatility, with a strong return over the last three months but a substantial decrease over the last six months and year-to-date. The stock's current price is a mere 21.79% of its 52-week high, signaling a sharp decline in investor confidence. Moreover, Minerva does not pay a dividend, which may limit its appeal to income-focused investors.
For those considering an investment in Minerva Neurosciences, it's worth noting that InvestingPro provides a fair value estimate of $3.00, which is lower than the analyst target of $7.00 but higher than the previous close price of $2.94. This discrepancy underscores the importance of conducting thorough research and considering multiple perspectives when evaluating a stock's potential. For additional insights and tips, investors can explore the 7 other InvestingPro Tips available for Minerva Neurosciences at https://www.investing.com/pro/NERV.
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