Raymond James has downgraded Gossamer Bio Inc (NASDAQ: GOSS) to Market Perform from Outperform following the publication of sotatercept's Phase 3 data in NEJM.
The analyst has already thought that seralutinib would exhibit weaker efficacy than Merck & Co Inc's (NYSE: MRK) sotatercept in comparable populations.
Using Hodges-Lehman location shift (HLLS) statistic for 6MWD, Merck reported a difference of 40.8m in Phase 3 compared to LSMD of 24.9m in Phase 2, which makes the development path for seralutinib even more difficult.
Sotatercept reduced the risk of clinical worsening or death by 84%, supporting the adoption as the new standard of care on top of existing therapies.
Raymond James writes that Gossamer may need to run another Phase 2 as an add-on to sotatercept or a Phase 3 in FC III patients only.
Although Gossamer has additional development plans for seralutinib in pulmonary hypertension (PH) due to interstitial lung disease (PH-ILD), a confirmed plan is required.
The analyst also writes that while PAH program discontinuation would still be a negative catalyst, the market may view the event positively. Gossamer's CNS penetrant BTKi GB5121 currently offers an upside.
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