NervGen Pharma is a high-risk, high-reward stock, analyst says

Raymond James analyst Michael W. Freeman thinks NervGen Pharma (NervGen Pharma Corp Stock Quote, Chart, News, Analysts, Financials TSXV:NGEN) is undervalued.

In a research update to clients April 8th, the analyst maintained his “Outperform” rating and target price of $4.50 per share on the stock.

At a recent event, NervGen highlighted the urgent need for treatments for spinal cord injuries (SCI) and presented details of its ongoing clinical trial for NVG-291, a first-of-its-kind drug aimed at repairing nerve damage. Early results from the trial’s chronic injury group are expected in June 2025. If successful, NVG-291 could become the first drug to improve movement and nerve function in SCI patients, an area where no approved treatments currently exist.

“We recommend clients get familiar with NGEN’s story during the next few months,” Freeman said.

He added that when it comes to the company’s work the potential reward is significant, but the risk is also high, as no drug has yet proven to reverse neurological damage in humans. However, Freeman outlined several reasons the trial could succeed: it targets the SCI patients most likely to respond, uses a sensitive and objective primary outcome measure, is based on a unique mechanism not seen in past failures, and may qualify for a faster path to approval thanks to its FDA Fast Track status.

“We highlight that the large potential reward here is countered by high risk: no drug has yet been proven to significantly impact neurological recovery in humans, and there have been numerous unsuccessful attempts,” the analyst wrote. “With this risk/reward profile as our context, we came away from the event with four potentially risk-mitigating takeaways: (1) NGEN selected the likeliest SCI population (chronic, motor incomplete injury) to yield a clean clinical signal; (2) NGEN electrophysiology-based primary endpoint is an objective, high-sensitivity measure for detecting any signal produced by NVG-291, supported by functional endpoints; (3) NVG-291’s core mechanism of action (relieving the neural repair-inhibiting action of CSPGs) is distinct from the collection of failed/abandoned therapeutic candidates previously trialed in SCI, offering fresh inroads toward, perhaps, a central pathway in neural repair, and; (4) NGEN’s regulatory process could lead to a relatively direct path to registration, potentially within ~1 year in the case of accelerated approval post-Ph2 or in ~3 years post Ph3, each aided by NGEN’s FDA Fast Track Designation.”