On Tuesday, Stifel, a financial services firm, downgraded HilleVax, Inc. (NASDAQ:HLVX) stock, moving its rating from Buy to Hold. The firm also dramatically reduced its shares target, setting it at $3.00, a steep decline from the previous target of $34.00.
This change follows the release of disappointing results from HilleVax's Phase 2b NEST-IN1 trial, which led to the discontinuation of the development of its HIL-214 vaccine for infants.
The trial's results have cast doubt on the immediate future of HIL-214, a vaccine candidate aimed at preventing norovirus-related illnesses in infants. Stifel noted that while HilleVax remains well-capitalized, the current data does not support a near-term investment case.
The firm suggested that HilleVax might explore a potential development path for HIL-214 or HIL-216 in older and at-risk adult populations, where there is a significant need due to the morbidity and mortality caused by norovirus.
Despite the potential for the vaccine to be effective in adults—as indicated by field and challenge studies—the firm believes that pursuing this path would be a resource-intensive process that may not lead to immediate investor support.
Stifel's updated model for HilleVax has now removed projected infant sales of HIL-214 and anticipates a protracted and potentially highly dilutive route to registering and commercializing the vaccine for adult use.
The firm's revised target price of $3.00 reflects its updated estimate of HilleVax's year-end 2024 net cash position. Stifel's analysis suggests that, given the recent trial outcomes and the expected challenges ahead, there is limited potential for the stock's near-term appreciation.
The downgrade and revised price target reflect a significant shift in the firm's outlook for HilleVax, with a more cautious stance on the stock's investment prospects in light of the recent developments.
In other recent news, HilleVax has decided to halt the development of its HIL-214 vaccine for infants following a trial setback. The NEST-IN1 clinical study, which aimed to assess the vaccine's efficacy, safety, and immunogenicity in infants around five months old, failed to meet its primary and secondary efficacy endpoints. Despite demonstrating a consistent safety and immunogenicity profile, the vaccine only achieved a 5% efficacy rate.
The trial compared the incidence of moderate or severe acute gastroenteritis (AGE) due to specific norovirus genotypes in both the vaccine and placebo groups. A total of 51 primary endpoint events were recorded, with no significant clinical benefit detected across secondary endpoints.
HilleVax's CEO, Rob Hershberg, expressed disappointment over the study's results, suggesting the efficacy in infants might have been influenced by the emergence of multiple GII.4 norovirus strains during the trial. However, HilleVax's previous studies, including the NOR-211 trial in adults, had shown significant efficacy.
In light of these recent developments, the company will now focus on advancing the development of its vaccine candidates in adult populations. The decision to shift focus is based on the company's current plans and expectations regarding its vaccine development programs.
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