Keros Therapeutics stock plummeted Thursday after the company said it stopped giving higher doses in a lung disease study after some patients experienced unexpected side effects.
The company is testing a drug called cibotercept in patients with pulmonary arterial hypertension, or PAH, a condition in which high blood pressure occurs in the lungs. But, in some patients, the higher doses caused excess fluid to build up in the sac around the heart, known as pericardial effusion.
Keros voluntarily stopped giving the 3 milligram and 4.5 milligram per kilogram doses of its drug, but is continuing to test the 1.5 milligram dose.
"We view this as a major setback and are unsurprised by the significant pressure on KROS shares," Leerink Partners analyst Thomas Smith said in a report.
On the stock market today, Keros Therapeutics shares crashed 73.2%, closing at 18.43. Keros stock undercut its 50-day and 200-day moving lines, and gave up a recent breakout from a cup-with-handle base, according to MarketSurge.
'Shock' To Management
The news is clearly a "shock" to management, William Blair analyst Matt Phipps said in a report. In earlier preclinical studies, significantly higher doses passed muster after six months. And there were no signs of pericardial effusion in healthy volunteers during three-month studies.
"We believe the clinical setback will make it difficult to regain investor interest in cibotercept, which was the company's lead program and main value driver," he said in a report.
He downgraded shares to a market perform rating from outperform.
Keros is going up against Merck, which gained Food and Drug Administration approval for its PAH drug, Winrevair, in March. Winrevair and cibotercept both block a group of proteins called activin, which can play a role in inflammation.
Phipps says it will take more data to convince physicians, patients and investors that cibotercept is different from Winrevair.
In another report, Wedbush analyst Yun Zhong kept an outperform rating on Keros stock, but slashed his price target to 47 from 84.
"Although we recognize the significant uncertainties created by the unexpected safety findings, we believe the program is still viable, and data from the 1.5mg/kg cohort in 2Q25 could still support continued development," he said.
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