On Friday, BTIG adjusted its stance on Outlook Therapeutics Inc. (NASDAQ: NASDAQ:OTLK), reducing the price target significantly to $9.00 from the previous $50.00, while still retaining a Buy rating on the stock.
The company's shares, currently trading at $1.70, have experienced a dramatic 66% decline over the past week, according to InvestingPro data. This move comes after the company's product, ONS-5010, did not meet the 95% confidence interval (CI) threshold for the primary endpoint in the NORSE EIGHT trial. Despite this, the difference in visual acuity between ONS-5010 and the comparator drug, ranibizumab, was within the noninferiority margin at eight weeks.
Outlook Therapeutics plans to resubmit the Biologics License Application (BLA) for ONS-5010 in the first quarter of 2025. This decision is based on the expectation of three-month data from the NORSE EIGHT study, which is due in January 2025. The firm's stance is that there is still potential for the drug's approval, given that the company's valuation is currently very low and that ONS-5010 has already been approved in Europe.
The analyst noted that there are precedents for drugs being approved by the FDA's ophthalmology division even after not meeting the primary endpoint in Phase 3 trials. The firm also pointed out that ONS-5010 is not seeking biosimilar approval, which could lead to more leniency from the regulatory agency due to established efficacy and safety data.
Management at Outlook Therapeutics has reportedly addressed all the outstanding Chemistry, Manufacturing, and Controls (CMC) comments from the Complete Response Letter (CRL) they received. With the final three-month NORSE EIGHT data anticipated in January 2025, this is considered a crucial factor for the BLA resubmission. InvestingPro analysis reveals that despite current challenges, two analysts have revised their earnings upwards for the upcoming period, with analyst consensus maintaining a Strong Buy recommendation.
In Europe, where ONS-5010 has already received approval, the company is preparing for a launch in 2025. The analyst has included a conservative estimate of $170 million in peak revenue from the European market, which translates to approximately $2.00 per share in their financial model. Following the latest developments, the price target has been adjusted to reflect a lower probability of success for ONS-5010 in the U.S. market, now set at 55% down from 90%, and an increased discount rate, now at 25% up from 15%.
With a current market capitalization of just $40.21 million and an EBITDA of -$61.19 million in the last twelve months, the company faces significant financial challenges. Subscribers to InvestingPro can access 11 additional investment tips and comprehensive financial metrics to better evaluate the company's potential.
In other recent news, Outlook Therapeutics reported preliminary results from its NORSE EIGHT clinical trial, which evaluated ONS-5010 for the treatment of wet age-related macular degeneration (wet AMD (NASDAQ:AMD)).
The trial did not meet its non-inferiority endpoint at week 8, but preliminary data indicated an improvement in vision and confirmed the treatment's biologic activity and safety. ONS-5010, also known as LYTENAVA, has received regulatory approval in the European Union and the United Kingdom (TADAWUL:4280) earlier this year for the treatment of wet AMD, and the company plans to resubmit a Biologics License Application for ONS-5010 in 2025.
Despite the trial results, Outlook Therapeutics expressed confidence in ONS-5010/LYTENAVA as an important therapy for wet AMD. The company is continuing with its plans for a potential 2025 launch in the UK and Germany. H.C. Wainwright analysts have maintained a Buy rating on Outlook Therapeutics, indicating a positive outlook toward these recent developments.
Additionally, Outlook Therapeutics has completed patient enrollment for its NORSE EIGHT clinical trial, marking a significant step toward the potential resubmission of a Biologics License Application for ONS-5010 in the United States. These are the latest developments in the company's ongoing efforts to bring effective treatments to market.
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