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

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

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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