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Investing.com - Needham lowered its price target on Moonlake Immunotherapeutics (NASDAQ:MLTX) to $20.00 from $66.00 on Tuesday, while maintaining a Buy rating on the stock. The company’s shares, currently trading at $6.25, have fallen 88% in the past week, though InvestingPro data indicates the stock may be oversold based on technical indicators.
The significant reduction follows disappointing Phase 3 results where the VELA-2 trial missed its primary endpoint due to a higher placebo effect, creating uncertainty about the regulatory path forward for the company’s SLK therapy.
Despite the setback, Needham noted that SLK demonstrated efficacy that was mostly in-line or better than competitor Bimzelx on nearly all endpoints in both trials, along with a favorable safety and tolerability profile.
Moonlake shares are currently trading below the company’s cash balance of $7 per share, which Needham views as an overreaction given solid Phase 2 trial results across multiple indications and ongoing trials including a Phase 3 program in PsA. InvestingPro analysis shows the company maintains a strong liquidity position with a current ratio of 16.65 and more cash than debt on its balance sheet, though it’s burning through cash rapidly. Get access to 12 more exclusive ProTips and detailed financial metrics with InvestingPro’s comprehensive biotech research tools.
The firm’s maintained Buy rating reflects confidence in SLK’s potential despite the regulatory uncertainty, which could potentially require another Phase 3 trial in a worst-case scenario.
In other recent news, Moonlake Immunotherapeutics announced mixed results from its Phase 3 VELA program trials for the treatment of moderate to severe hidradenitis suppurativa. The VELA-1 trial achieved statistical significance, with 35% of patients receiving sonelokimab reaching a 75% reduction in inflammatory lesions, compared to 18% for placebo. However, the VELA-2 trial did not meet its primary endpoint, showing a 35.9% response rate against 25.6% for placebo, falling short of market expectations. Following these results, several analyst firms adjusted their outlooks on the company. Guggenheim cut its price target to $20.00 from $80.00, maintaining a Buy rating. Clear Street also reduced its price target significantly to $12.00 from $108.00, while keeping a Buy rating. Jefferies downgraded Moonlake from Buy to Hold, lowering its price target to $8.00 from $65.00. Despite the trial setbacks, Wedbush maintained its Outperform rating and $80.00 price target, noting the unexpected nature of the trial data.
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