Wedbush on Tuesday moved Gossamer Bio Inc. (NASDAQ:GOSS) to a Neutral rating from Outperform and lowered its price target sharply to $1.00 from $6.00, following the release of data from the company’s Phase 3 PROSERA trial. Shares of Gossamer tumbled to $0.42, reflecting an 80% decline over the past week, according to InvestingPro data.
The analyst at Wedbush, Laura Chicho, framed the central issue for the company as whether a registrational path remains for seralutinib after the trial results. The PROSERA study did not achieve its primary endpoint; the placebo-adjusted improvement in six-minute walk distance measured 13.3 meters and failed to reach statistical significance.
In the wake of the trial outcome, Wedbush updated multiple elements of its valuation and timing assumptions. The firm extended its estimate for product launch into fiscal year 2028 and tightened its view of the potential patient population to higher-risk pulmonary arterial hypertension (PAH) patients who are receiving three or more therapies. Wedbush also increased its discount rate to 40% to reflect heightened uncertainty.
Financing and capital structure concerns were highlighted as part of the firm’s re-evaluation. Wedbush noted that Gossamer needs to pursue avenues to restructure existing convertible debt and models that restructuring occurring in 2026. The firm also incorporated additional financing events into its model to bridge the company through commercialization.
Market-oriented data services flagged the company’s deteriorating cash picture: an InvestingPro tip quoted that the company is "quickly burning through cash," and the firm’s overall financial health score was noted as a weak 1.52. Gossamer is managing roughly $200 million in convertible notes due in 2027 while the company expects to hold about $105 million in cash by the end of the first quarter, figures cited in recent analyst commentary.
Wedbush summarized the regulatory and market position succinctly: "Absent regulatory clarity, we anticipate shares will remain range bound as we move to a Neutral rating," Chicho wrote.
The PROSERA outcome prompted other broker reactions as well. Barclays downgraded Gossamer to Underweight from Overweight and materially reduced its price target. Leerink Partners lowered its rating to Market Perform from Outperform, pointing to the trial’s failure to meet statistical significance. Cantor Fitzgerald, by contrast, left an Overweight rating in place.
These developments - the clinical readout, rating changes, and the company’s reported financing runway - have attracted close attention from investors and analysts, given their implications for near-term strategy and long-term commercial prospects for seralutinib.
Clear summary
Wedbush downgraded Gossamer Bio to Neutral and cut its target to $1.00 after the PROSERA Phase 3 trial missed its primary endpoint; the firm extended launch expectations to fiscal 2028, narrowed the addressable patient population, raised its discount rate to 40%, and underscored the need for debt restructuring and additional financings as cash dwindles.
Key points
- Wedbush moved Gossamer to Neutral from Outperform and reduced its price target to $1.00 from $6.00, citing the PROSERA trial shortfall.
- The firm extended launch timing to fiscal 2028, narrowed the addressable market to higher-risk PAH patients on three or more drugs, and increased its discount rate to 40% - adjustments that compress valuation and expected near-term revenue potential.
- Capital markets and healthcare sectors are affected as analysts flagged the need to restructure roughly $200 million of convertible notes and to secure additional financing, while the company projects about $105 million in cash at the end of the first quarter.
Risks and uncertainties
- Regulatory uncertainty - the absence of a clear registrational path for seralutinib following the trial miss clouds approval prospects and market value.
- Financing and capital structure - the company faces the risk of needing to restructure convertible debt in 2026 and to raise more capital to reach commercialization, which could dilute existing shareholders.
- Clinical outcome risk - the PROSERA trial did not meet its primary endpoint, with a placebo-adjusted six-minute walk distance improvement of 13.3 meters that lacked statistical significance, directly impacting market and analyst sentiment.