On Thursday, Keros Therapeutics (NASDAQ:KROS) experienced a shift in stock rating as TD Cowen downgraded the biotechnology company's shares from Buy to Hold. This change comes after Keros Therapeutics announced a halt in dosing for certain arms of its clinical trial.
The company stopped dosing in the 3.0 and 4.5mg/kg arms due to the unexpected development of pericardial effusion in participants. Despite the news, the stock remains near its 52-week high of $73, having delivered an impressive 131% return over the past year. InvestingPro data reveals the company maintains a strong financial position with more cash than debt on its balance sheet.
The decision to continue the trial at a lower dose of 1.5mg/kg was made as the higher doses, particularly the 4.5mg/kg arm, were showing promising activity based on the FSH data. However, with the suspension of the higher dosage arms, TD Cowen expressed concerns over the drug's competitive edge.
The analyst stated, "Unfortunately, the 4.5mg/kg arm is the only one that appears active based on the FSH data." According to InvestingPro, broader analyst consensus remains quite bullish, with price targets ranging from $76 to $113.
The halted dosing has significant implications for Keros, as the analyst remarked that the 4.5mg/kg arm's activity was a crucial factor in the drug's potential to compete effectively. With this arm no longer in play, the firm's outlook on Keros has become less optimistic. The analyst further explained, "As a result, we believe it is now highly unlikely that it is competitive with sota."
The change in rating reflects the firm's revised expectations for the company's lead drug candidate, cibo, which was previously considered a major value driver for Keros.
The current developments have led to a more cautious stance on the company's stock, as the potential for competitive success is now deemed unlikely.
In other recent news, Keros Therapeutics has been the subject of various analyst reports and significant operational developments.
The biopharmaceutical company's shares were downgraded to neutral by BTIG following a safety update on a clinical trial deemed "thesis-breaking." Despite this, Keros Therapeutics has maintained a strong buy recommendation with a price target range of $76-$113 according to InvestingPro data.
Keros Therapeutics has also entered a significant licensing agreement with Takeda Pharmaceutical (TADAWUL:2070) Company (NYSE:TAK). This agreement focuses on the development of elritercept and includes an upfront payment of $200 million to Keros. The deal could potentially reach $1.1 billion in milestone payments, according to reports from analyst firms including Guggenheim, BofA Securities, and Jefferies.
The company has also 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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