MoonLake Crashes 90% After Drug Trial Disappoints
Shares of the immunotherapeutics firm plummeted after its pivotal Phase 3 trial for sonelokimab failed to deliver convincing results, triggering a securities fraud investigation.
Shares of MoonLake Immunotherapeutics (NASDAQ: MLTX) collapsed by nearly 90% in a single trading session after the company's much-anticipated Phase 3 VELA-2 trial for its lead drug candidate, sonelokimab, delivered disappointing results. The catastrophic stock drop erased billions in market capitalization and has prompted .
The clinical-stage biotechnology company announced that its trial for sonelokimab in patients with moderate-to-severe hidradenitis suppurativa, a chronic inflammatory skin condition, failed to meet its primary endpoint with statistical significance. While the company stated both its VELA-1 and VELA-2 trials technically met their goals, the margin of improvement over a placebo was not convincing enough for investors. The VELA-2 trial, in particular, showed only a 9% enhancement in patient response compared to a placebo, a figure that casts serious doubt on the drug's commercial viability.
The market's reaction was swift and brutal. The stock, which had been trading near its highs, plunged from $61.99 to just $6.24 per share. This precipitous fall reflects the high-stakes nature of biotechnology investments, where a company's fortunes often rest on the binary outcome of clinical trials. Sonelokimab is MoonLake's most critical asset, and its failure to produce a clear clinical victory has jeopardized the company's future.
Analysts had once projected peak sales for sonelokimab to potentially exceed $4 billion, a figure that will now be drastically revised downwards. According to a , MoonLake's dependency on this single asset has left it profoundly vulnerable. While the company maintains a solid cash position of approximately $425 million, its significant operating cash burn of over $200 million in the past year means its financial runway is now a critical concern.
The disappointing outcome underscores the inherent risks of drug development. The inconsistency between the VELA-1 and VELA-2 trial results highlights the challenges of achieving clear and replicable efficacy in late-stage studies. For MoonLake, the path forward is uncertain. The company faces not only a clinical setback but also legal challenges and a crisis of investor confidence that will be difficult to overcome.