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On Wednesday, Maxim Group adjusted its outlook on Dermata Therapeutics Inc (NASDAQ:DRMA), slashing the price target to $3.00 from the previous $6.00, yet reaffirming a Buy rating on the stock. According to InvestingPro data, the stock has declined over 76% in the past year, though it maintains a "Fair" overall financial health rating. The adjustment follows Dermata’s recent financial disclosures and clinical trial updates.
Dermata Therapeutics filed its 10-Q on Sunday, May 14, 2025, revealing first-quarter results that included operating expenses below Maxim Group’s estimates and a GAAP loss per share that was in line with expectations. The firm noted that it stands as the sole sell-side entity with published estimates for Dermata, according to LSEG. InvestingPro analysis shows the company’s diluted EPS stands at -$4.24 for the last twelve months, with analysts not expecting profitability this year.
The biopharmaceutical company reported significant positive topline data from its first pivotal Phase 3 trial of XYNGARI, a novel, once-weekly topical treatment for moderate-to-severe acne, with announcements made on March 27 and April 15, 2025. The successful trial outcomes have set the stage for a second Phase 3 trial anticipated to commence in the fourth quarter of 2025. Get deeper insights into Dermata’s development pipeline and 8 additional exclusive ProTips with an InvestingPro subscription.
As of March 31, 2025, Dermata had a financial cushion of $9.7 million in cash and equivalents and carried no debt. The company’s average quarterly cash burn is projected at approximately $2.6 million through the year, with current resources expected to sustain operations into the first quarter of 2026. With a current ratio of 3.7x, the company’s liquid assets comfortably exceed its short-term obligations. Nevertheless, there is a possibility of a capital raise in the third or fourth quarter of 2025 to fund ongoing clinical initiatives.
Following the first-quarter results and future projections, Maxim Group has made slight adjustments to its 2025 operating expense estimates for Dermata and has kept the 2026 estimates largely unchanged. Trading at 0.6 times book value, the stock appears modestly priced, though InvestingPro Fair Value analysis suggests slight overvaluation at current levels. The anticipated capital raise and expected share dilution have prompted the firm to revise its 12-month price target for Dermata Therapeutics, leading to the new $3.00 target.
In other recent news, Dermata Therapeutics has announced promising results from its Phase 3 trial for XYNGARI™, a topical acne treatment. The trial, involving 520 patients, demonstrated significant improvements in both inflammatory and non-inflammatory acne lesions, with 29.4% of patients achieving a clear or almost clear skin rating compared to 15.2% in the placebo group. These results are statistically significant and may set the stage for a new drug application to the U.S. Food and Drug Administration if future trials are successful. Additionally, Dermata is facing a delisting warning from Nasdaq due to non-compliance with the minimum stockholders’ equity requirement. The company reported approximately $1.6 million in equity, falling short of the $2.5 million threshold. Dermata has been given until May 9, 2025, to submit a compliance plan to Nasdaq. If accepted, the company could receive an extension until September 21, 2025, to meet the requirements. Dermata is exploring options to address this equity shortfall while continuing to advance its clinical programs.
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