Q32 Bio Stock Plunges After Analyst Downgrades, Price-Target Slashes Over Alopecia Data: Retail Confidence Drops

Shares of Q32 Bio (QTTB) plummeted over 60% in premarket trading Wednesday following mixed results from Phase 2a trials of its lead candidate, bempikibart (ADX-914). 

The clinical-stage biotech company is under heavy selling pressure, with retail sentiment turning ‘extremely bearish’ on Stocktwits amid a spike in message volume.

The SIGNAL-AA trial for alopecia areata showed “encouraging” clinical activity, with a mean reduction of 16% in the Severity of Alopecia Tool (SALT) score for bempikibart recipients versus 2% in the placebo group at 24 weeks. 

However, only 9% of bempikibart patients achieved SALT-20, compared to none in the placebo group.

Meanwhile, the SIGNAL-AD trial for atopic dermatitis failed to meet its primary endpoint in Part B, with patients receiving bempikibart showing a 74% improvement in the Eczema Area and Severity Index at 14 weeks, compared to 76% in the placebo group. 

CEO Jodie Morrison expressed disappointment, citing plans to review the data to understand the high placebo rate and trial outcomes better.

The mixed results prompted a series of downgrades:

• Wells Fargo cut its rating to ‘Equal Weight’ from ‘Overweight’ and slashed its price target to $16 from $95, citing disappointing atopic dermatitis results and concerns over Q32’s cash needs.

• Leerink lowered its rating to ‘Market Perform’ from ‘Outperform’, with a price target of $9, down from $68. The firm removed atopic dermatitis value from its model and noted uncertainty around alopecia areata progression.

• Raymond James downgraded Q32 Bio to ‘Outperform’ from ‘Strong Buy’, with its price target falling to $22 from $90. Analyst Steven Seedhouse highlighted underestimated market reaction but acknowledged the potential of the IL7R-4 mechanism.

• Oppenheimer reduced its price target to $20 from $80 while maintaining an ‘Outperform’ rating, citing the alopecia opportunity’s potential despite setbacks in atopic dermatitis.

Despite the sharp decline, QTTB shares remain up over 120% year-to-date. 

However, near-term sentiment and confidence in the stock have been severely dented, with investors awaiting further clarity on the drug’s development plans.

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