MoonLake shares crash 90% after mixed phase III trial data of skin disease drug

Quotes of MoonLake Immunotherapeutics, a mid-cap biotech developing therapies for inflammatory skin and joint diseases, plunged 90% yesterday, September 29, after the company reported disappointing phase III trial results for its lead candidate sonelokimab. Investors staged a massive selloff, erasing most of the company’s market value.

MoonLake shares plunged 89.9% to $6.24 per share on Monday, the lowest level since April 2022. Trading volume reached 95.4 million shares, 53 times the daily average, according to Yahoo Finance data. The selloff followed topline results from phase III trials of sonelokimab, which performed only marginally better than placebo.

The company described the results as mixed, noting that efficacy in line with expectations was offset by a higher-than-expected placebo response rate. “The higher-than-expected placebo response rate in VELA-2 is disappointing,” said Prof. Kristian Reich, MoonLake’s founder and chief scientific officer. He added that MoonLake will discuss the data with regulators to determine next steps in the approval process.

MoonLake focuses on novel therapies for inflammatory diseases, with sonelokimab as its only clinical asset. The drug is being tested across several indications, but the most advanced program is in hidradenitis suppurativa (HS) – a chronic, debilitating skin condition characterized by abscesses, nodules, and scarring, typically in the armpits, groin, and buttocks. HS affects up to 2% of the population, with higher prevalence among women and African Americans, according to an article in the Journal of the National Medical Association.

Wall Street had been closely watching the interim trial results, which are critical for determining sonelokimab’s registration prospects. Positive data had been expected to enhance MoonLake’s attractiveness as a takeover target, Freedom Broker noted in a note last week (seen by Oninvest).

For now, UCB’s Bimzelx remains the only approved biologic therapy for HS. On Monday, UCB shares surged as much as 20% to record highs after the MoonLake news, adding more than EUR7 billion in market value, Bloomberg reported.

JPMorgan analyst Richard Vosser wrote in a note quoted by Bloomberg that sonelokimab’s profile is “unambiguously inferior” to Bimzelx in HS. According to Morgan Stanley, MoonLake’s drug delivered a placebo-adjusted benefit of 14% across the two phase III trials, compared with 18% for Bimzelx.

Wedbush described the data as “a big surprise to many, if not all investors” and forecast “significant pressure” on MLTX shares. Still, the firm maintained its “outperform” rating and $80.00 per share target price, implying nearly 13-fold upside from current levels, writes Investing.com.

Overall, MoonLake stock has 14 "buy" ratings versus 4 "hold" ratings, MarketWatch data shows. The average target price is $67.20 per share, more than 10 times above current quotes.

The AI translation of this story was reviewed by a human editor.