Neumora plummets on depression drug data

Neumora Therapeutics, a well-funded biotechnology company, lost more than 80% of its value Thursday because its most advanced drug failed a major test.

After seeing positive signs in a smaller study in 2023, Neumora pushed the drug into a trio of late-stage clinical trials to evaluate it as a treatment for the most common type of depression. The company just released data from the first of those trials, which found the drug no better than a placebo at alleviating depression.

The “KOASTAL-1” study had a main treatment period of six weeks and enrolled 383 adults with moderate-to-severe MDD, or major depressive disorder. Researchers assigned half of the participants to Neumora’s drug, navacaprant, and half to a placebo. Both of those groups performed the same, with each experiencing an average decrease of 12.5 points on a 60-point scale that measures depression symptoms.

Rob Lenz, head of Neumora’s research and development, said the company is “disappointed by the results” since they are “not consistent with the body of evidence” that suggests drugs like navacaprant could be useful against MDD. Navacaprant is designed to spur the release of dopamine — one of the so-called happy hormones — by inhibiting a type of protein known as kappa opioid receptors. Johnson & Johnson and AbbVie are also working on depression drugs that target these receptors.

Neumora’s results did somewhat differ based on sex. Women had greater responses to the drug, showing a 14-point average decrease versus a 10.6-point decrease among men. Conversely, men had a greater response to the placebo. “There is a lot to investigate from this study,” Lenz said, particularly the contrasts between men and women.

Neumora plans to provide more updates on the navacaprant development program later this month, at the industry’s bellwether event, the annual J.P. Morgan Healthcare Conference. The trial outcome “is not what we expected, but there are encouraging trends in the data that we are analyzing,” said Henry Gosebruch, the former chief strategy officer at AbbVie who took over as Neumora’s CEO in 2023.

Investors, though, appear to have lost confidence in the program. Neumora’s share price, which hovered around $11 on Tuesday, was down to just over $2 Thursday morning. 

“We believe that today’s readout represents a worst-case scenario for the program,” wrote Brian Abrahams, an analyst at the investment firm RBC Capital Markets, in a note to clients.

Abrahams acknowledged that the placebo responses in KOASTAL-1 were larger than what had been seen in prior studies. However, Neumora went to “great lengths” to structure the trial so that placebo effects would be low and it would have an optimal shot at success. As such, the RBC team is “inclined to believe the outcome of the study reflects the true drug effect (or lack thereof) rather than any particular conduct issues.”

Both Abrahams and Paul Matteis, an analyst at Stifel, are skeptical that the differences seen among men and women in the trial will translate to anything meaningful for the drug’s development. “[A]fter what looks like a clear failure, it’s hard for us to have conviction,” Matteis wrote in his own note to clients.

Neumora had $342 million in cash by the end of September, which, according to Gosebruch, should keep it operational into the middle of 2026.

The Massachusetts-based biotech was founded in 2019 and launched two years later, armed with half a billion dollars in funding. Neumora’s backers include Amgen as well as prominent life sciences investors like Arch Venture Partners, Polaris Partners, Invus, F-Prime Capital and Alexandria Venture Investments. 

The company raised $250 million in an initial public offering in September 2023, and shares peaked at about $20 apiece several months later. 

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