AN2 Therapeutics Downgraded by Leerink Partners Due to Trial Setbacks

Summary

AN2 Therapeutics (NASDAQ:ANTX) recently experienced a rating downgrade from Leerink Partners, slashing its price target from $23.00 to $7.00. This move came after ANTX’s announcement about the weakened effectiveness found in their ongoing phase 2 trial of epetraborole. The update reflects Leerink Partners’ adjusted projections for the drug candidate’s market performance and informs ANTX’s decision for their upcoming Phase 3 trial – to target a patient subgroup that shows positive responses. Reporting a reserve of $150.2 million, ANTX appears financially stable in the face of an operational setback. However, investor unease looms as the company’s metrics indicate a dismal outlook.

Key Details of AN2 Therapeutics (ANTX) Rating Downgrade

Leerink Partners recently altered their rating for AN2 Therapeutics from Outperform to Market Perform, following ANTX’s announcement about less than expected results in their ongoing Phase 2 trial of the drug epetraborole. The lowered rating and decreased price target reflect Leerink Partners’ assessment of the potential market performance of the drug. ANTX is now considering concentrating on a subsection of patients in the upcoming Phase 3 trial, hoping to identify those who react positively to the treatment.

Implications for Future Trials

The decision to constrict the recruitment criteria for future trials is due to the lesser than expected responder rate in the current trial phase. Earlier expectations of a solid double-digit responder rate were dashed, leading to the downgrade. The firm suggests that Phase 2 results expected in the second quarter of 2024 might offer less promising outcomes than originally projected.

Uncertainty about Patient Subgroup

The likelihood of epetraborole’s success now depends on the identification of a precise patient subgroup that would benefit from the drug. The uncertainty about which subgroup may respond has nudged the firm to recalibrate their model assumptions and reduce their outlook for the drug candidate’s performance in the market.

Significant Reserve Despite Setback

Despite the setback, AN2 Therapeutics had a significant $150.2 million in cash and investments as of last September. This reserve should be sufficient to cater to operating expenses till summer 2025, offering some financial stability while handling the clinical trial process.

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