AN2 Therapeutics Downgraded to “Perform” by Oppenheimer Following Pause in Phase 3 Trial
AN2 Therapeutics’ stock rating took a hit on Monday as Oppenheimer downgraded the company from an “Outperform” to a “Perform” rating. The decision followed an announcement from AN2 Therapeutics that it had paused enrollment for its pivotal Phase 3 trial of epetraborole. The treatment, which aims to address treatment-refractory Mycobacterium avium complex (MAC), showed potentially lower efficacy than expected.
As a result, the company is now reassessing the direction of the trial and engaging in discussions about what steps to take next and when to proceed. AN2 Therapeutics anticipates making a decision on the path forward in the second quarter, once all patients have completed six months on the study drug. This is expected to occur around March 12th. The company has outlined three possible scenarios for the completion of the Phase 3 program: proceeding without changes, amending the protocol, or terminating the study altogether.
The pause in the trial could potentially cause a delay of two to three quarters for the Phase 3 program, according to an analyst from Oppenheimer. With the current uncertainty and lack of concrete data or guidance from AN2 Therapeutics, the analyst has taken a more cautious stance by downgrading the stock rating. This change reflects concerns over potential protocol changes and the impact on the study population being evaluated, suggesting a neutral outlook for AN2 Therapeutics’ shares until more definitive information becomes available.
Despite the setback in the clinical trial, AN2 Therapeutics has shown resilience in the market with a price total return of 137.25% over the past six months, indicating strong investor confidence in the long term. The company’s current Price to Earnings (P/E) Ratio stands at a negative -6.55, reflecting investor skepticism about current profitability. The adjusted P/E ratio for the last twelve months as of Q3 2023 is -9.97. Additionally, the stock is currently trading at 90.01% of its 52-week high, suggesting it is nearing its peak market valuation over the past year.
While the short-term outlook may be clouded by the trial’s pause, AN2 Therapeutics’ long-term price appreciation potential is underscored by an analyst target fair value of $26.5, although a more conservative fair value assessment is $10.55. Investors will be eagerly awaiting the company’s next earnings report on March 27, 2024, which could provide further clarity on its financial position and the impact of the trial’s status on its future prospects.
According to InvestingPro data, AN2 Therapeutics currently holds a market capitalization of $594.83 million. Despite the downgrade and uncertainty surrounding the Phase 3 trial, investors seem to have faith in the company’s long-term potential.
Analyst comment
Neutral news. Market impact: The downgrade and pause in the Phase 3 trial may lead to a delay of two to three quarters for the program. AN2 Therapeutics is reassessing the trial’s direction and considering potential protocol changes. Investors are cautious due to the lack of concrete data, resulting in a neutral outlook for the stock. Long-term potential is still positive, with a target fair value of $26.5.
