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On Tuesday, H.C. Wainwright analyst Douglas Tsao revised the price target for Outlook Therapeutics Inc. (NASDAQ:OTLK), a small-cap biotech with a market capitalization of approximately $60 million, to $3.00, a significant decrease from the previous $30.00 target, while maintaining a Buy rating on the stock. According to InvestingPro data, the company currently shows weak financial health with a score of 1.13 out of 5, reflecting its development-stage status. The adjustment follows recent clinical trial outcomes for the company’s key product candidate, ONS-5010.
Outlook Therapeutics’ ONS-5010, an investigational ophthalmic formulation of bevacizumab, was designed to meet the regulatory requirements to be sold as a branded pharmaceutical for retinal diseases. The product met the non-inferiority margin at week 12 in the NORSE 8 study, which introduced some optimism regarding its potential approval. However, Tsao noted that it is uncertain how much emphasis the FDA will place on the week 12 findings since the only pre-specified endpoint in the study was at week 8, which ONS-5010 failed to meet. With the company’s current ratio at 0.32, InvestingPro analysis indicates that short-term obligations exceed liquid assets, highlighting the importance of potential regulatory approval for the company’s financial future.
The NORSE 8 study’s primary endpoint at week 8 was part of a special protocol assessment (SPA) with the FDA, and the subsequent non-inferiority margin achieved at week 12 was not pre-specified, nor was there prior agreement with the FDA regarding this outcome. This casts doubt on how the FDA will interpret the week 12 data.
Tsao also pointed out a precedent with Apellis’ Syfovre, which missed its primary endpoint at 12 months in the DERBY study but achieved success at 18 months, a pre-specified secondary endpoint. In contrast, the 12-week data for ONS-5010 was not pre-established, which complicates the comparison.
Reflecting on these developments, H.C. Wainwright has updated their model for Outlook Therapeutics, assigning separate probabilities of success (PoS) for the European Union and U.S. markets at 100% and 10%, respectively. This is due to the approval of ONS-5010 in the EU and the ongoing uncertainties regarding its approval in the U.S. Additionally, the firm has adjusted the enterprise value-to-sales (EV/Sales) multiple from 7.5x to 3.5x, leading to the lowered price target. Investors should note that the company is scheduled to report earnings on February 20, which could provide crucial updates on the regulatory pathway. The current analyst consensus remains bullish, with targets ranging from $3 to $33, though InvestingPro subscribers have access to detailed financial metrics and additional analyst insights that could help evaluate these projections.
In other recent news, Outlook Therapeutics has seen significant developments, including leadership changes and product advancements. Faisal G. Sukhtian has been appointed as Chairman of the Board of Directors, succeeding Randy Thurman, who remains as Lead Independent (LON:IOG) Director. The company also announced the departure of its CEO, Russell Trenary, with Lawrence Kenyon stepping in as Interim CEO.
Outlook Therapeutics is preparing for the commercial launch of its newly approved ophthalmic formulation, LYTENAVA™, in the EU and UK markets. The product, aimed at treating wet age-related macular degeneration (wet AMD (NASDAQ:AMD)), is the first of its kind to receive marketing authorization in these regions. The company is also working on an FDA resubmission for the product in the United States.
In the realm of clinical trials, the company’s investigational drug ONS-5010 demonstrated non-inferiority to Lucentis in treating wet AMD, as reported at the Hawaiian Eye and Retina 2025 Meeting. Despite not meeting the non-inferiority endpoint at week 8, the 12-week results suggested that ONS-5010’s performance was on par with ranibizumab.
However, Chardan Capital Markets has downgraded its rating for Outlook Therapeutics from Buy to Neutral following the release of these clinical study results. The firm cited concerns regarding the regulatory approval process for Lytenava in the U.S., as the FDA requires two successful adequate and well-controlled studies for approval in wet AMD treatment. The NORSE 8 study did not meet its primary endpoint, leading to regulatory uncertainty.
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