Our Stock of the Week is Mereo BioPharma Group (MREO). MREO is a UK-based biotechnology company that focuses on drugs for rare and specialty diseases.
It has two key drugs in development. The first is Setrusumab, which is used for rare brittle bone disease. It has partnered with Ultragenyx Pharmaceuticals (RARE) and issued very positive phase 2/3 data on June 11. Pivotal data should be released late in 2024 or early in 2025.
The other key drug is Alvelestat, which treats a rare form of lung disease. The company is preparing for a Phase 3 study and is likely looking for a partner similar to RARE for this drug. That is the biggest short-term catalyst for the stock. Partnership news could come at any time.
Analysts recently upgraded their expectations for the company. There are five buy recommendations with an average price target of $6.80, which is 88% higher than the current price. Robert Baird initiated coverage with a ‘buy’ and an $8 target and stated that ‘an Alvelestate partnership could represent a surprise catalyst.’
Technically, the stock jumped on the Phase 2 Seetrusumab news and analysts’ comments but pulled back to a trading range around the $3.50 level. There is strong support in this area, and it looks like a low-risk entry area. The stock could languish for a while as it awaits news, but the attractive valuation should provide support.
As always, we will not chase strength on Monday but will look to aggressively trade the name into volatility.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and buy or sell anytime for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing positions in MREO. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.
