A piece of good news suddenly ignites excitement.

On the evening of January 3rd, following the opening of the US stock market, the stock price of automotive AI technology company Cerence surged dramatically, climbing over 67% at one pointThe news reported that the company had expanded its partnership with NVIDIA to enhance the capacity of its CaLLM series language models.

Simultaneously, the stock of Neumora, a company focused on developing innovative drugs for brain diseases, also experienced a significant spike, gaining over 25% during the day

This comes in contrast to the previous trading day when Neumora's stock plummeted dramatically, falling more than 81% in a single day, marking its largest single-day drop since its listingThe catalyst for this drastic decline was a major failure in the development of an antidepressant drug.

In the broader US stock market, all three major indices saw a reboundAs of 11 PM, the Nasdaq rose by 0.93%, the Dow Jones climbed 0.29%, and the S&P 500 index saw an increase of 0.54%. Tech stocks largely gained, with NVIDIA rising over 3% and Tesla increasing by more than 2%. Additionally, many popular Chinese concept stocks also experienced gains, with MINISO soaring over 8%, Ctrip increasing beyond 3%, and NetEase, JD.com, and Li Auto each climbing over 1%.

A Sudden Surge

Later that evening, the stock price of Cerence continued to rise, reaching an increase of over 62% as of 11 PM.

The company announced news of its enhanced cooperation with NVIDIA, aimed at improving its CaLLM series language models.

According to the statement from Cerence, the expanded partnership with NVIDIA provides scalable and reliable tools and resources enabling collaboration with automotive manufacturers to develop next-generation user experiences.

This collaboration supports the CaLLM series through the NVIDIA AI Enterprise, a cloud-native end-to-end software platform, while certain aspects of CaLLM Edge are backed by the NVIDIA DRIVE AGX Orin.

Notably, Cerence reported revenue of $331.5 million over the past 12 months, with a gross margin of 73.7%. The company forecasts free cash flow of $25 million for the fiscal year 2025.

Cerence’s core business revolves around creating AI-based virtual assistants for the mobile and transportation sectors, primarily targeting the automotive market

• Dual Tail Risks in the U.S. Stock Market
• Gold Reserves Grow for Two Months in a Row
• Market Surge: Semiconductor Sector's Unexpected Boost!
• Crisis in the American Job Market
• Surge! Just hit an all-time high!

Their solutions are applicable across all forms of transportPreviously, Cerence announced a strategic shift towards generative artificial intelligence, aiming to restore profitability by fiscal year 2025.

Nils Schanz, Executive Vice President of AI Products and Technologies at Cerence, stated, "By optimizing the performance of the CaLLM series language models, we are saving our automotive manufacturer clients costs while enhancing performance as they rapidly deploy generative AI solutions for their driversAs we progress to the next-gen platform based on CaLLM, these advanced features will provide drivers with quicker and more reliable interactions, enhancing their safety, enjoyment, and productivity on the road."

Rishi Dhall, vice president of automotive at NVIDIA, added, "Large language models offer expansive new user experiences, but the complexities of scaling and deployment can challenge developers in delivering AI-driven solutions to end-users

Through this expanded collaboration, Cerence AI is leveraging advanced NVIDIA AI and accelerated computing technologies to optimize the development and deployment of its large language models."

Major Counterattack

Meanwhile, the stock of Neumora also saw a large spike, at one point increasing over 25%, although this later narrowed to a 14% increase by 11 PM.

Just a day prior, Neumora's stock faced a catastrophic plunge, dropping more than 81% in a single trading session.

The significant dive was triggered by a major setback in their antidepressant drug development.

According to the company's announcement on its official website, in a clinical trial involving 383 adult patients with major depressive disorder, their highly anticipated depression drug, navacapant, failed to demonstrate significant effectiveness.

Neumora expressed disappointment in the study’s results but noted there are still encouraging trends in the analyzing data, stating, “We have much to investigate further.”

Navacapant is a novel daily oral kappa-opioid receptor (KOR) antagonist currently being developed for treating major depressive disorder.

This revelation raised significant concerns about the company's future in the innovative drug market

Analysts stated that while patients showed some symptom improvement, the efficacy of navacapant was equivalent to that of a placebo, failing to achieve statistically significant resultsThis outcome reflects a severe lack of efficacy for the drug, which contradicts earlier studies suggesting its potential.

Following this announcement, Royal Bank of Canada urgently downgraded Neumora’s rating and reduced its target price to $4.

Prior to this, there was significant optimism surrounding navacapant as a promising new method for treating major depressive disorder, which affects approximately 21 million people in the United States annually

Major depression is a severe mental health disorder characterized by intense negative emotions that greatly impact an individual’s daily functioning.

Analyst Yatin Suneja from Guggenheim previously indicated that if the antidepressant study were successful, Neumora's stock could potentially experience a 1 to 2-fold increase.

Neumora’s CEO Henry Gosebruch stated that as of the end of the third quarter of 2024, the company holds over $340 million in cash reserves to support upcoming drug research.

Gosebruch also noted that Neumora will present updates on navacapant and other product lines at the JP Morgan Healthcare Conference, scheduled to take place on January 13th in San Francisco.

A $440 billion Super Track

Analysts noted that the optimism surrounding Neumora's antidepressant drug is largely due to the immense and rapidly growing global market for antidepressants.

According to data and estimates from the World Health Organization (WHO), over 264 million people globally suffer from depression, with projections indicating this figure could rise to 330 million by 2030.

Reports indicate that depression is a unique and persistent health concern with complex origins, characterized by imbalances of brain chemicals, genetic factors, and external pressures, impacting individuals regardless of gender, background, social class, or age.

Currently, psychotherapy and pharmacotherapy are the main treatment methods for depression

While there exists a variety of antidepressants that can, to some extent, restore the balance of neurotransmitters and thus improve anxiety and depressive symptoms, it is undeniable that pharmacotherapy comes with several drawbacks.

Most antidepressant medications used clinically are grounded on adjusting the monoamine neurotransmitter system, which leads to a slow onset of action, a high relapse rate, low remission rate, numerous adverse reactions, and long durations of treatmentFor example, some patients may experience side effects such as insomnia, drowsiness, significant weight gain, and emotional blunting.

According to Grand View Research, the global antidepressant market is projected to reach $60 billion by 2028 (approximately 440 billion yuan).

The vast opportunities within the antidepressant market have attracted pharmaceutical companies to rush in

Data from DXY Insight shows that currently, China has 22 approved innovative antidepressants, among which 21 are imported from multinational companies like Pfizer, Eli Lilly, and GlaxoSmithKline; only one is developed by a Chinese enterprise, namely the sustained-release torasemide tablets from Luye Pharma.

In recent years, multiple pharmaceutical companies have accelerated their research into first-class antidepressant new drugsIn 2023, seven new first-class antidepressant drugs received clinical approval in ChinaAmong these, KH607 tablets from Kanghong Pharmaceutical, HS-10506 from Huadong Medicine, MI078 capsules from Minoway, ZG-001 capsules from Zhi Gen Pharma, and LV232 capsules from Nantong Hefenglianwang have all begun Phase I clinical trialsIn the first half of 2024, only two first-class antidepressant drugs are expected to receive clinical approval: I040 from Shanghai Pharmaceuticals and NH103 oxalate tablets from Enhua Pharma.