Keros Therapeutics' (KROS) efforts to develop new treatments for pulmonary arterial hypertension remain potentially viable despite the company announcing Thursday that it voluntarily halted dosing in the 3 mg/kg and 4.5 mg/kg arms of its phase 2 trial for cibotercept, analysts at Wedbush wrote in a research note Thursday.

The company's decision was based on a safety review due to the unanticipated observation of pericardial effusion adverse events in the trial.

Keros said none of the affected patients in the higher-dose cohorts died, and dosing in the 1.5 mg/kg arm is ongoing after a risk-benefit assessment, according to the note.

However, several critical questions remain unanswered, including the timing and number of pericardial effusion cases, the baseline characteristics of the affected patients, and whether the adverse events were dose-dependent or linked to other factors.

"We believe KROS is actively investigating the nature of the (adverse events) to

identify the potential cause," and will pass along meaningful information as quickly as possible, they wrote, adding they were encouraged by Keros saying it continues to expect to report top-line data from the trial by mid-2025.

The company emphasized preserving data integrity despite some patients being unblinded for the independent data monitoring committee's review, which Wedbush believes supports the reliability of future results.

While the unexpected safety findings have created uncertainties, Wedbush noted that the pericardial effusion observations could be indication-specific and are unlikely to impact other programs in Keros' pipeline.

Wedbush cut its price target for Keros shares to $47 from $84, reflecting a reduced probability of success for cibotercept in pulmonary arterial hypertension and lower projections for its eventual market penetration in the US and EU.

Despite the uncertainties created by the safety findings in the trial, Wedbush maintained an outperform rating on Keros, citing the potential of its broader drug pipeline and financial strength as key supporting factors.

Keros recently were down over 73% in midday trading, rebounding only slightly from a more than 77% decline earlier Thursday.

Price: 18.24, Change: -50.41, Percent Change: -73.43