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Investing.com - H.C. Wainwright upgraded Moonlake Immunotherapeutics (NASDAQ:MLTX) from Neutral to Buy on Monday, setting a price target of $30.00 per share. The firm cited what it called "capricious" Street treatment of the company’s sonelokimab drug that was "unsupported by data." This target represents nearly 200% upside from the current price of $10.10, with InvestingPro data showing MLTX trading 84% below its 52-week high of $62.75.
The upgrade follows Moonlake’s October announcement of 16-week results from its Phase 3 VELA-1 and VELA-2 trials evaluating sonelokimab, a proprietary anti-IL-17 nanobody construct, in patients with moderate-to-severe hidradenitis suppurativa (HS). In the combined program, patients treated with sonelokimab showed "clinically meaningful and statistically significant improvement" across all primary and key secondary endpoints.
VELA-1 achieved statistical significance for all primary and key secondary endpoints, with sonelokimab demonstrating a placebo-adjusted difference of 17% on the HiSCR75 measure (p
H.C. Wainwright argues the current market valuation, which implies less than $300 million in enterprise value, undervalues Moonlake’s potential. The firm’s analysis assigns a $1.9 billion enterprise value to the company, even while applying only a 30% probability of approval for sonelokimab in HS and 50% in psoriatic arthritis. InvestingPro data shows MLTX’s current market cap at $641 million, with its Fair Value assessment suggesting the stock is undervalued. The company’s strong financial position is reflected in its high current ratio of 16.65 and more cash than debt on its balance sheet.
The research firm contends there are only two logical ways to view the VELA program data: either sonelokimab "is not a viable drug," warranting a below-cash valuation, or it’s "a viable drug with clinical impact that is at least on par with second-tier HS agents" with potential to demonstrate superiority in longer-term assessment. Investors awaiting more clarity might note that MLTX’s next earnings report is due on November 18, according to InvestingPro, which offers comprehensive Pro Research Reports on more than 1,400 US equities, transforming complex data into actionable intelligence for smarter investing decisions.
In other recent news, Moonlake Immunotherapeutics has faced a series of significant developments following the mixed results from its Phase 3 VELA clinical trials for the sonelokimab (SLK) treatment. Oppenheimer has lowered its price target for the company from $104.00 to $25.00, while still maintaining an Outperform rating. H.C. Wainwright downgraded Moonlake’s stock from Buy to Neutral due to the disappointing trial outcomes, despite some clinically meaningful improvements observed. Needham also reduced its price target from $66.00 to $20.00, citing a higher placebo effect in the VELA-2 trial, which missed its primary endpoint.
Guggenheim followed suit, cutting its price target from $80.00 to $20.00, while maintaining a Buy rating. The VELA-2 study failed to achieve statistical significance, with a placebo-adjusted difference falling short of market expectations. Clear Street made the most drastic adjustment, slashing its price target from $108.00 to $12.00, while still holding a Buy rating. These adjustments reflect the market’s response to the uncertain regulatory path forward for Moonlake’s SLK therapy.
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