TLDR
- MoonLake Immunotherapeutics (MLTX) shares crashed 88% to $7.52 after mixed Phase 3 trial results for sonelokimab
- The drug failed one of two hidradenitis suppurativa trials due to higher-than-expected placebo response rates
- Only 35% of patients showed improvement versus 18% on placebo in the successful trial, lower than investor expectations
- Analysts called results “disappointing” and “uncompetitive” compared to existing treatments like Bimzelx
- The company lost approximately $3.5 billion in market value, with shares falling from $62 to under $10
MoonLake Immunotherapeutics stock collapsed Monday morning after the Swiss biotech company delivered mixed results from two key clinical trials. The company’s shares plummeted 88% to $7.52 in premarket trading, wiping out roughly $3.5 billion in market value.
The dramatic selloff came after MoonLake released data Sunday from two Phase 3 trials testing sonelokimab in patients with hidradenitis suppurativa. This chronic inflammatory skin condition causes painful abscesses and tissue scarring.
Sonelokimab showed mixed performance across the twin studies. In one trial, about 35% of patients treated with the drug experienced improvement in disease symptoms after four months. This compared to roughly 18% of patients who received a placebo.
While this result met statistical requirements, the difference between treatment and placebo groups fell short of investor expectations. The gap wasn’t as wide as executives and Wall Street had hoped to see.
The second trial delivered even more disappointing news. Sonelokimab failed to meet its main objective in this study entirely.
MoonLake blamed this failure on a “higher than expected” placebo response rate. The company noted that placebo recipients responded at a much higher rate than historical data suggested they would.
Drug Faces Tough Competition
Sonelokimab works by binding to inflammatory proteins involved in the disease’s progression. The drug targets two inflammatory cytokines plus albumin, a protein that helps extend the drug’s duration in the body.
MoonLake had positioned sonelokimab as potentially superior to existing treatments. The company claimed its drug’s small molecular size and targeting approach might make it more potent and longer-lasting than current biologics.
Available treatments include AbbVie’s Humira, UCB’s Bimzelx, and Novartis’ Cosentyx. Bimzelx and Cosentyx both received approval for hidradenitis suppurativa in 2023 and 2024 respectively.
These recent approvals raised the bar for sonelokimab. The drug needed to not only beat placebo but also prove competitive with these established options.
Analyst Reaction Turns Negative
Wall Street analysts quickly turned bearish on MoonLake’s prospects following the data release. Multiple firms expressed skepticism about the drug’s approval path and commercial potential.
RBC Capital Markets analyst Brian Abrahams called the results “uncompetitive” with Bimzelx. He said this likely relegates sonelokimab to “a much narrower role” and raises doubts about its potential in other diseases.
Leerink’s Thomas Smith noted the data introduced “uncertainty” around MoonLake’s approval path and commercial outlook. Stifel analyst Alex Thompson went further, saying a “clear path to approval” appears “off-the-table in the near term.”
The disappointing results represent a major setback for MoonLake, which had attracted considerable investor interest. The company reportedly turned down a buyout offer from Merck & Co. earlier this year.
Company Response and Next Steps
MoonLake emphasized positive aspects of the trial data in its Sunday statement. The company noted that pooled results from both studies showed “clinically meaningful and statistically significant improvement” across all trial goals.
Company executives plan to discuss the results with regulatory authorities. They will explore “analytical strategies” needed given the unexpectedly high placebo response in one trial.
MoonLake’s trials are continuing, and the company aims to chart an approval path with regulators despite the mixed results.
The stock had traded around $62 per share before the trial data release. Shares opened Monday morning at less than $10, representing one of the largest single-day biotech crashes in recent memory.
