MoonLake Immunotherapeutics Stock Surges After Major Plunge

Shares of MoonLake Immunotherapeutics experienced a significant recovery on March 12, 2024, rebounding by 14% after a dramatic plunge of nearly 90% the previous day. The stock’s volatility followed the announcement of mixed results from the company’s late-stage trials of Sonelokimab, a treatment for moderate-to-severe hidradenitis suppurativa (HS), a chronic inflammatory skin condition.

On March 10, MoonLake revealed the results from its VELA-1 and VELA-2 trials. In VELA-1, Sonelokimab demonstrated statistical significance across all primary and key secondary endpoints, indicating a substantial improvement in patients’ conditions. In contrast, the VELA-2 trial did not achieve similar statistical significance, raising concerns among investors. Following the announcement, shares closed at $6.25, the lowest price seen in over three years.

As of March 12, shares of MoonLake were trading at $7.41. This fluctuation has prompted analysts to reassess their outlook on the stock. Notably, Serge Belanger, an analyst at Needham, revised the firm’s price target for MoonLake from $66 to $20 but maintained a ‘Buy’ rating. Belanger highlighted the uncertain regulatory path ahead for the company, suggesting that another late-stage trial might be necessary in a worst-case scenario.

Analysts Respond to Mixed Trial Results

The mixed data from the VELA trials led to further price target adjustments from other firms. Guggenheim also cut its price target for MoonLake to $20 from $80, while retaining a ‘Buy’ rating on the stock. Investors are now focused on the regulatory journey for Sonelokimab, given the drug’s potential for various applications. MoonLake is conducting additional clinical studies for conditions such as palmoplantar pustulosis, psoriatic arthritis, and axial spondyloarthritis, which together represent a multibillion-dollar market.

In contrast, Citi analyst Samantha Semenkow downgraded MoonLake from ‘Buy’ to ‘Neutral,’ lowering the price target to $5, down from $72. Semenkow cited “significant” regulatory risks surrounding the drug and noted that MoonLake is currently facing financing challenges.

Despite the stock being down by 89% this year, retail sentiment remains notably optimistic. On the social media platform Stocktwits, discussions around MLTX stock have remained in the ‘extremely bullish’ territory, with high message volumes indicating strong interest. Some users even express expectations for further increases in the stock price, despite the recent analyst downgrades.

As MoonLake navigates its uncertain future, the outcomes of ongoing clinical studies and regulatory decisions will be critical in shaping both the company’s trajectory and investor confidence.