MoonLake Stock Collapses 90% on Disappointing Drug Trial Data
Mixed Phase 3 results for its lead drug sonelokimab raise regulatory concerns and trigger a securities fraud investigation into the company.
Shares of MoonLake Immunotherapeutics (NASDAQ: MLTX) plummeted nearly 90% in a single day, erasing roughly $3.4 billion in market value after the company announced mixed results from pivotal Phase 3 trials for its lead drug candidate, sonelokimab. The catastrophic drop, which saw the stock fall from $61.99 to just $6.24, has prompted a on behalf of investors.
The sell-off was triggered by , designed to evaluate the drug's effectiveness in treating the inflammatory skin condition hidradenitis suppurativa (HS). While one of the two trials, VELA-1, met its primary endpoint, the second, VELA-2, was deemed a 'near-miss' due to an unusually high placebo response. This mixed outcome has cast significant doubt on the drug's path to regulatory approval and its future commercial viability.
The news marks a stunning reversal for the biotech firm, which had previously enjoyed high optimism fueled by takeover rumors and bullish analyst ratings, with some price targets stretching as high as $108 per share. In the wake of the data release, , with Stifel cutting its rating to 'Hold' and RBC Capital downgrading to 'Sector Perform' alongside drastic reductions in their price targets.
Despite the clinical setback, MoonLake reported a substantial cash position of approximately $425 million at the end of the second quarter of 2025, which it states provides a cash runway into 2028. The company intends to discuss the path forward with regulators, but now faces a more challenging environment with increased competition in the HS market, which is projected to reach $15 billion by 2035. While MoonLake has other ongoing trials for sonelokimab, the VELA trial results present a significant hurdle for a company once seen as a promising takeover target.