Merus Shares Surge 31% on Positive Head and Neck Cancer Trial Results

Shares of Merus surged over 30% following promising interim results from its Phase 2 trial of petosemtamab combined with pembrolizumab for head and neck squamous cell carcinoma, showing a 63% overall response rate and a 79% 12-month overall survival rate, outperforming pembrolizumab alone. CEO Bill Lundberg expressed optimism that the treatment could become a new standard of care if approved, with top-line Phase 3 data expected in 2026. Analysts have responded positively, with BMO Capital increasing their price target to $110 and maintaining an Outperform rating, while Bank of America raised its target to $92, both citing the drug's potential as a best-in-class treatment. The average analyst price target is around $88, reflecting a significant potential upside, and the consensus rating across brokers is Strong Buy or Outperform. However, some valuation models like GuruFocus suggest the stock may be overvalued relative to historical multiples, indicating some downside risk. Overall, investor sentiment is highly favorable due to the strong clinical data and improved survival outcomes compared to existing therapies.