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Investing.com - H.C. Wainwright downgraded Outlook Therapeutics Inc. (NASDAQ:OTLK) from Buy to Neutral on Friday, slashing its price target to $1.00 from $3.00 following a Complete Response Letter (CRL) from the FDA for the company’s wet AMD treatment. The downgrade triggered a severe market reaction, with InvestingPro data showing the stock plummeting nearly 60% in the past week, bringing its market capitalization down to $46.71 million.
The FDA rejected Outlook’s Biologics License Application (BLA) resubmission for ONS-5010 (bevacizumab-vikg), citing the failure of the confirmatory NORSE 8 study to meet its pre-specified primary endpoint at week 8. Despite the treatment achieving non-inferiority at week 12, regulators recommended the company submit additional confirmatory evidence of efficacy to support approval. According to InvestingPro metrics, the company’s financial health score stands at a weak 0.99, with current liabilities exceeding liquid assets.
Outlook Therapeutics plans to meet with the FDA to determine what additional evidence would be required, though H.C. Wainwright believes another Phase 3 study will likely be necessary. The investment firm expressed concerns about the company’s cash position complicating its ability to conduct further studies. Financial data from InvestingPro supports these concerns, revealing a concerning current ratio of 0.67 and significant negative EBITDA of -$72.51 million in the last twelve months. Get access to 10+ additional ProTips and comprehensive financial metrics with InvestingPro.
Following the rejection, Outlook indicated it would shift focus to commercializing Lytenava (ONS-5010) in Europe, particularly in Germany. The company expects to provide further updates after its upcoming Type-B meeting with the FDA.
H.C. Wainwright has removed all projected U.S. revenues for ONS-5010 from its valuation model and reduced operating expense forecasts for Q4 FY2025 and beyond, while assuming the company will need to raise additional capital to support operations.
In other recent news, Outlook Therapeutics faced a setback as the U.S. Food and Drug Administration (FDA) rejected its application for the wet age-related macular degeneration treatment, ONS-5010/LYTENAVA. The FDA issued a Complete Response Letter, citing a lack of substantial evidence of effectiveness and recommending additional confirmatory efficacy evidence. Despite this, Outlook Therapeutics announced the commercial availability of LYTENAVA in Germany and the UK, marking it as the first approved ophthalmic formulation of bevacizumab for wet AMD in the European Union and UK. Additionally, Bob Jahr has been appointed as the new CEO, bringing over 20 years of biopharmaceutical industry experience to the company.
In terms of financial analysis, Brookline Capital Markets lowered its price target for Outlook Therapeutics to $10, citing a lower cash balance, while maintaining a Buy rating. Similarly, Ascendiant Capital adjusted its price target to $21 from $24, also maintaining a Buy rating, and based on a net present value analysis, they see potential upside from the current share price. These developments reflect ongoing challenges and opportunities for Outlook Therapeutics in the competitive biopharmaceutical landscape.
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