In a report released yesterday, Joseph Schwartz from Leerink Partners downgraded Reneo Pharmaceuticals (RPHM – Research Report) to a Hold, with a price target of $1.00.
Joseph Schwartz has given his Hold rating due to a combination of factors primarily centered around the disappointing results from a critical clinical study and subsequent strategic decisions by Reneo Pharmaceuticals. The main catalyst for the downgrade is the failure of the Phase 2b STRIDE study of mavodelpar in treating primary mitochondrial myopathies (PMM), a study that did not meet its primary or secondary efficacy endpoints. This has led the company to halt development of mavodelpar and to initiate cost-saving measures, including significant workforce reductions. The suspension of development activities and the uncertainty of the company’s future direction contribute to the Hold rating.
Moreover, Schwartz has adjusted the probability of success (PoS) for the drug’s application in PMM to 0% from the previous 60%, and in long-chain fatty acid oxidation disorders (LC-FAOD) to 10% from 50%. These adjustments reflect the heightened uncertainty and suspended development of mavodelpar. Additionally, Schwartz has taken into account the company’s operational expense reductions due to the halted drug development and workforce downsizing. Despite the company having over $100 million in cash and equivalents, the overall outlook has necessitated a reduction in the price target from $15 to $1, further reinforcing the Market Perform rating, which reflects a neutral stance on the stock’s potential.
RPHM’s price has also changed dramatically for the past six months – from $7.420 to $1.340, which is a -81.94% drop .
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Reneo Pharmaceuticals (RPHM) Company Description:
Reneo Pharmaceuticals Inc is a clinical stage pharmaceutical company. It is focused on the development of therapies for patients with rare genetic mitochondrial diseases, which are often associated with the inability of mitochondria to produce adenosine triphosphate (ATP). The company is developing REN001 to modulate genes critical to metabolism and generation of ATP, which is the primary source of energy for cellular processes.
Read More on RPHM:
- Reneo Pharmaceuticals Announces Results from Pivotal STRIDE Study of Mavodelpar in Primary Mitochondrial Myopathies (PMM)
- Block upgraded, Bristol Myers downgraded: Wall Street’s top analyst calls
- Reneo Pharmaceuticals initiated with an Outperform at William Blair
- Reneo Pharmaceuticals files $300M mixed securities shelf
- Reneo Pharmaceuticals reports Q3 EPS (57c), consensus (57c)
