Avalanche Biotechnologies Buried By Disappointing Data, Downgrades

Avalanche Biotechnologies Inc AAVL dropped more than 50 percent Tuesday on a disappointing drug trial results and at least several analyst downgrades.

The company said its wet macular degeneration treatment called AVA-101 "could potentially benefit a significant portion of patients" suffering from disease, based on results of a trial posted late Monday.

But investors and analysts were unimpressed, with Avalanche trading recently at $17.38, down $21.54 (55.4 percent).

Chardan Capital's Gbola Amusa downgraded Avalanche to Sell, from Neutral and said vision improvements shown in the study was far below levels required for a commercially viable drug.

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Amusa, who cut his target on Avalanche to $20, had been previously skeptical of Ava-101 and said he continues to believe that gene therapy isn't currently viable for wet macular degeneration.

Analysts at SunTrust and William Blair were a bit less harsh, downgrading Avalanche to Neutral and Market Perform, respectively.

Trial results disclosed Monday "appear somewhat positive," according to SunTrust's Salveen Richter, who nonetheless cut his price target 58 percent to $25.

Richter said the trial leaves "multiple questions remaining" and that results offered insufficient clarity regarding AVA-101's prospects.

Blair's Tim Lugo expects further test results on the drug in November and said "the market will have difficulty" valuing AVA-101 until then.

A potential deal by Avalanche with Regeneron Pharmaceuticals Inc REGN regarding AVA-101 is likely to await further test results, Lugo said.

But Piper Jaffray's Steven P. Breazzano maintained an Overweight rating and $52 target.

"We recommend that jets be cooled," Breazzano said. "It is a small trial, demonstrating safety and evidence of biologicactivity, but leaving plenty of room for improvement."

Investors clamoring to "over-interpret this early data are likely to run into dead ends," Breazzano said.