MoonLake Suffers 90% Collapse on Failed Drug Trial
Disappointing Phase 3 data for its lead drug sonelokimab triggers massive sell-off and analyst downgrades, erasing billions in market value.
Shares of MoonLake Immunotherapeutics (MLTX) cratered nearly 90% in a single session after the company announced disappointing results from a pivotal Phase 3 trial for its lead drug candidate, sonelokimab. The catastrophic decline wiped out the majority of the company's market capitalization and triggered a wave of analyst downgrades, raising serious questions about the future of the treatment and the company itself.
The sell-off was a direct response to data from the VELA-2 trial, which evaluated sonelokimab as a treatment for , a chronic and painful inflammatory skin condition. While the drug showed a statistically significant effect in one of its two Phase 3 trials, a in the second trial meant the study failed to meet its primary endpoint. This unexpected outcome shattered investor confidence and led to immediate and severe consequences.
The market's reaction was swift and brutal. In the wake of the news, Wolfe Research from "Outperform" and slashed its price target from $76 to a mere $2. The analyst noted that even if there is a potential path forward for the drug, realizing any value for shareholders would be an exceedingly challenging and lengthy process. The dramatic revision reflects a near-total loss of faith in the drug's near-term commercial prospects.
The disappointing trial data has also attracted legal scrutiny. The national law firm Hagens Berman announced it has opened an investigation into whether MoonLake may have misled investors regarding the trial's design and the drug's efficacy. This adds another layer of uncertainty for the company as it navigates the fallout from the clinical setback. For patients suffering from hidradenitis suppurativa, a condition characterized by painful abscesses and scarring, the news represents a significant blow to hopes for a new, effective treatment option. MoonLake's path forward now appears fraught with clinical, financial, and legal challenges as it confronts the fallout from its devastating trial results.