On Friday, H.C. Wainwright adjusted its financial outlook on Lava Therapeutics NV (NASDAQ:LVTX), reducing the price target to $2.00 from the previous $6.00, while maintaining a Buy rating on the company's shares. The stock, currently trading at $0.99, is near its 52-week low of $0.96, having declined about 11% in the past week according to InvestingPro data.
The revision follows the company's decision to halt the LAVA-1207 program after it failed to meet the internal efficacy threshold in the Phase 1 study. LAVA-1207, aimed at treating refractory metastatic castration-resistant prostate cancer (mCRPC), showed safety and tolerability in trials, and initial efficacy signs were promising, indicating the drug's mechanism of action was functioning as expected.
Despite the discontinuation of the LAVA-1207 program, H.C. Wainwright expressed continued confidence in the therapeutic potential of Lava Therapeutics' Gammabody platform. The firm highlighted that the company has several wholly-owned candidates in its pipeline and ongoing partnerships with larger pharmaceutical companies.
InvestingPro data shows the company maintains a healthy current ratio of 5.36 and holds more cash than debt, though it's currently burning through cash with an EBITDA of -$27.48 million. The decision to stop the development of LAVA-1207 led to a reevaluation of the company's financial model, which included removing projected revenues from LAVA-1207.
The updated financial model now takes into account revenues related to LAVA-1266 for relapsed/refractory acute myeloid leukemia (r/r AML) and delays the expected launch of LAVA-1223 to the first quarter of 2030, previously anticipated for the third quarter of 2029. Additionally, the probability of LAVA-1223's launch has been increased to around 20% from the prior estimate of 10%. These changes reflect the strategic shift following the discontinuation of the LAVA-1207 program.
H.C. Wainwright's revised price target of $2.00 per share is a significant reduction from the earlier $6.00 target. The firm's commentary acknowledged the setback with LAVA-1207 but looked forward to the potential of the remaining drug candidates and the overall Gammabody platform. The analyst's statement concluded with an affirmation of the Buy rating despite the changes to the company's clinical and financial projections.
According to InvestingPro analysis, LVTX appears undervalued at current levels. Subscribers can access 12 additional ProTips and a comprehensive Pro Research Report covering this biotech company's financial health and growth prospects in detail.
In other recent news, Lava Therapeutics has experienced a change in its standings with both Leerink Partners and JMP Securities. The biotech company's stock was downgraded by Leerink Partners from Outperform to Market Perform, a decision following the discontinuation of Lava Therapeutics' leading program, LAVA-1207. JMP Securities also revised their rating, downgrading the company's stock from Market Outperform to Market Perform.
These recent developments come in the wake of Lava Therapeutics' third-quarter financial results for 2024, which reported a cash position of $78.9 million. Despite the halt of LAVA-1207, the company is proceeding with the Phase 1 trial of another asset, LAVA-1266.
The discontinuation of LAVA-1207 has raised questions about the broader applicability of Lava Therapeutics' Vδ2 T-cell engager platform. However, analysts from both Leerink Partners and JMP Securities acknowledged the company's strategic decision to reprioritize its pipeline as a disciplined approach to capital deployment. The market now awaits further progress on LAVA-1266 and other potential updates from Lava Therapeutics.
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