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Kymera cut to Neutral at Credit Suisse on upcoming readout

Clinical-stage biotech Kymera Therapeutics (NASDAQ:KYMR) dropped for the second straight session on Tuesday after Credit Suisse downgraded its shares to Neutral from Outperform, citing uncertainty in an upcoming readout for IRAK4 degrader KT-474.

Early this month, Kymera (KYMR) announced plans to share a clinical update on Part C of the Phase 1 clinical trial for KT-474 in patients with hidradenitis suppurativa (HS) or atopic dermatitis (AD).

The results will determine if partner Sanofi (NASDAQ:SNY) (OTCPK:SNYNF) will extend their agreement for KT-474 to a Phase 2 trial.

Credit Suisse analysts led by Richard Law wrote that the readout “has too much risk,” and the candidate lacks the potential to show efficacy. They cited multiple factors as reasons including a high placebo bar, small study size, and previous setbacks for Pfizer (PFE) and Johnson & Johnson (JNJ) in HS and AD, respectively.

Even if SNY decides to proceed to Phase 2, lack of efficacy in HS and AD means there would be concerns about the overall potential of KT-474, Law and the team argued, slashing their price target on the stock to $32 from $47 per share.

Pointing to previous setbacks for IRAK4 inhibitors, Seeking Alpha contributor Avisol Capital Partners dubs upcoming data “a major binary event” for the company.