Citi has revised its price target for Acelyrin Inc (NASDAQ: SLRN), lowering it to $6.00 from the previous $8.00 while maintaining a Neutral rating on the stock. The adjustment follows Acelyrin's announcement to strategically refocus its resources on the development of lonigutamab for thyroid eye disease while deprioritizing other projects.
Acelyrin has decided to shift its development emphasis after evaluating its pipeline. The company will concentrate on lonigutamab, an anti-IGFR1 antibody, and scale back efforts on izokibep, an IL17A antibody mimetic, and SLRN-517, an anti-C-Kit antibody. Despite izokibep meeting its primary endpoint in a Phase 3 trial for Hidradenitis Suppurativa (HS), the results did not show a statistically significant difference on a secondary endpoint, and the drug’s advancement is seen as less economically viable.
The company's strategic reprioritization is expected to extend its cash runway until mid-2027. Acelyrin is planning for an End of Phase 2 (EOP2) meeting later in the year and anticipates launching a Phase 3 registration program for lonigutamab in the first quarter of 2025. In light of these developments, Citi has adjusted its model for Acelyrin, reducing operating expenses and eliminating projected revenues from izokibep.
Citi has also increased the probability of success for lonigutamab to 50%, a significant jump from the previous 30%. This revised probability is a factor in the new price target of $6.00 per share, which reflects a $2.00 decrease from the former target.
Following positive outcomes from Phase 3 trials of izokibep for Hidradenitis Suppurativa (HS), Acelyrin decided against further internal development of the drug for HS and Psoriatic Arthritis (PsA) due to competitive concerns and insufficient efficacy. This strategic shift resulted in a workforce reduction of 33%.
InvestingPro Insights
In the context of Acelyrin Inc's strategic shift and Citi's revised price target, certain real-time metrics from InvestingPro provide additional insight into the company's financial health and market performance. With a market capitalization of approximately $471.37 million, Acelyrin's valuation reflects investor sentiment and the company's market position. The lack of a P/E ratio, given the negative earnings per share (EPS) of -$2.68 for the last twelve months as of Q1 2024, underscores the company's current lack of profitability, which aligns with analysts' expectations that Acelyrin will not be profitable this year.
InvestingPro Tips suggest that Acelyrin holds more cash than debt on its balance sheet, which is a positive sign for the company's financial stability. However, the company is quickly burning through cash, which is a concern for long-term sustainability, especially as Acelyrin refocuses its efforts on the development of lonigutamab. Additionally, the stock has fared poorly over the last month, with a price total return of -16.49%.
For readers seeking a deeper analysis, there are four additional InvestingPro Tips available at https://www.investing.com/pro/SLRN, which provide further guidance on Acelyrin's financial outlook and market performance. These insights can help investors make more informed decisions in light of the company's recent strategic changes and the industry's competitive landscape.
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