JMP Securities lowered its rating on Athira Pharma (NASDAQ:ATHA) to Market Perform from Market Outperform after the clinical-stage biotech said that its lead product candidate, fosgonimeton, did not meet key goals in a mid-stage trial for mild-to-moderate Alzheimer’s disease (AD).
While the company noted an improvement of certain clinical parameters in a pre-specified subgroup analysis of patients, the JMP analysts led by Jason N. Butler questioned the reproducibility of the effect.
Hovering more than 40% below the firm’s estimate of cash for the end of 2Q 2022, Athira’s (ATHA) valuation looks fair given the pressure on biotech as a significant number of companies are trading below cash, the team argued.
“The risk/reward profile for the stock is highly positively skewed should the subgroup findings be replicated in the LIFT-AD trial,” the analysts added, referring to an ongoing late-stage trial for fosgonimeton in mild-to-moderate Alzheimer’s.
However, additional visibility is required on plans/timing of LIFT-AD to become more constructive on the stock, according to analysts. “….Management has committed to providing more information in coming weeks, which we view as a necessary starting point,” they added.
After the trial results, Wall Street turned modestly bullish on Athira (ATHA) stock, with an average rating of Buy from analysts in line with Seeking Alpha Author ratings. However, Seeking Alpha's quant system, which consistently beats the market, rated ATHA as a Hold.