H.C. Wainwright downgrades HilleVax stock after vaccine trial setback

Tuesday - H.C. Wainwright has downgraded HilleVax, Inc. (NASDAQ:HLVX) stock from Buy to Neutral, setting a price target of $2.00, following disappointing results from a key vaccine trial.

The Phase 2B NEST-IN1 infant study, which evaluated the efficacy of the vaccine candidate HIL-214 for preventing moderate-to-severe acute gastroenteritis (AGE) due to norovirus, did not meet its primary endpoints.

The trial's primary focus was on assessing the number of subjects with moderate-to-severe AGE associated with the GI.1 or GII.4 norovirus genotypes. These genotypes are responsible for the majority of worldwide norovirus infections that lead to AGE. The failure of HIL-214 to demonstrate efficacy in infants has halted its development in that demographic. The future of the vaccine program in adults remains uncertain.

The analyst noted the prevalence of the GII.4 capsid genotype, which is the most predominant among both developing and developed countries. The study suggested that the efficacy of the vaccine might have been affected by the emergence of multiple GII.4 strains during the trial.

This raises questions about the need for a more diverse vaccine design that can address potential new strains, especially in the development of HIL-214 for adults or the Phase-1 ready candidate HIL-216.

H.C. Wainwright has expressed the need for reassurance that any further development of HilleVax's norovirus vaccine candidates, including HIL-214 for adults or HIL-216, will be capable of addressing the evolving strains of the GII.4 genotype and their associated AGE. The firm's downgrade reflects a cautious stance as it awaits further clarity on the direction and potential of HilleVax's vaccine platform.

In other recent news, HilleVax, Inc. has faced a significant setback with the discontinuation of its HIL-214 vaccine for infants following disappointing results from the NEST-IN1 clinical trial. The trial failed to meet its primary and secondary efficacy endpoints, achieving only a 5% efficacy rate.

In response to these developments, financial services firm Stifel downgraded HilleVax's stock from Buy to Hold and significantly reduced its share target to $3.00, a sharp decrease from the previous target of $34.00.

The firm's revised model for HilleVax has now removed projected infant sales of HIL-214 and anticipates a protracted route to registering and commercializing the vaccine for adult use.

Despite these challenges, HilleVax intends to advance the development of its vaccine candidates in adult populations, shifting focus from its initial vaccine program for infants.

The decision to halt infant vaccine development and refocus on adult demographics is based on the company's current plans and expectations regarding its vaccine development programs. These recent developments reflect a significant shift in the company's outlook and investment prospects.

InvestingPro Insights

In light of HilleVax, Inc.'s (NASDAQ:HLVX) recent clinical trial setbacks, investors are closely monitoring the financial health and market sentiment surrounding the company. According to InvestingPro data, HilleVax currently has a market capitalization of $77.86 million and is trading at a price significantly below its fair value, as estimated by analysts, of $28. The stock's price-to-book ratio, as of the last twelve months leading up to Q1 2024, stands at a mere 0.33, indicating that the stock may be undervalued relative to the company's assets.

However, the company's financials paint a challenging picture, with an operating income of negative $138.86 million and an EBITDA that has declined by 66.18% over the same period. These figures reflect HilleVax's difficulties in generating profitable growth, which is further underscored by the stock's negative price performance, including an 89.25% drop over the past year.

Amidst this financial landscape, InvestingPro Tips suggest that HilleVax holds more cash than debt, which could provide some financial flexibility in the short term. Additionally, the stock is currently trading near its 52-week low, which might attract investors looking for potential bargains. It's important to note that four analysts have revised their earnings upwards for the upcoming period, indicating a potential shift in market sentiment. For those interested in a deeper dive into HilleVax's financials and market prospects, InvestingPro offers additional tips and insights. Remember to use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.

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