Paradigm Capital doubles its price target on NervGen Pharma

Paradigm Capital has doubled its price target on NervGen Pharma (NervGen Pharma Stock Quote, Chart, News, Analysts, Financials TSXV:NGEN) to $9.70, with analyst Scott McAuley maintaining a “Speculative Buy” rating on June 16 after early trial data showed signs the company’s treatment could help the central nervous system repair itself following spinal cord injury.

“The market reacted negatively despite the positive outcome,” McAuley said. “We see this as an opportunity to redefine treatment for these patients.”

He said a key question has been whether NervGen’s positive animal results would carry over to humans. The Phase 1b/2a data show that NVG-291 can strengthen neural connections in patients with chronic spinal cord injury, as indicated by increased motor evoked potential (MEP) amplitude, suggesting that this may lead to functional gains.

“Importantly, safety appears clear with no serious adverse events and no discontinuations,” he said. “This is a strong base for a path forward to fully establish the efficacy profile and build the safety database. The company will continue working through the data and will meet with the FDA in the fall to establish a path forward. We assume that a larger pivotal trial will be needed before approval, but clinical risk has been reduced with this proof-of-concept data.”

McAuley said the data release triggered a sell-the-news reaction, likely due to high expectations, some confusion about the results, and anticipation of a possible financing.

“The shares had performed well leading into the readout, up 55% from the final patient recruited in early January to the day before the readout, slightly higher than the 49% average increase we have seen historically in other Canadian non-oncology trials,” he said. “There was also confusion around the primary endpoint. The trial showed a statistical increase in MEP to the arm muscles (p=0.0155), but not to the legs, which caused some confusion if the trial was successful or not.”

He said the stock has started to recover as the market digests the trial’s success. He expects NervGen will meet with the FDA this fall to plan next steps, with the subsequent trial set to begin in the first half of 2026.

“We expect the company needs additional capital to complete the next trial, but there are a few quarters of runway with $14.5M on the balance sheet and burning an average of $4.4M in operations per quarter over the last year. We also expect to see the results of the sub-acute arm of the trial in summer 2026, which could provide some needed news flow.”

Paradigm views the market’s adverse reaction to the positive trial results as a buying opportunity.

“Our updated $9.70 target (was $5.00) is based on an rNPV of our NVG-291 assumptions in the U.S., with the main difference being an increased probability of success,” McAuley said. “We do expect a financing by the end of the year, which could be an overhang, but clarifying the clinical path forward this fall and the data from the sub-acute arm in summer 2026 will be important milestones.”

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