Credit Suisse Slashes Edge Therapeutics Price Target By 94%, Downgrades Stock After Failed Trial

Edge Therapeutics Inc EDGE closed down 87 percent Wednesday and continued to decline Thursday after announcing layoffs, the discontinuation of its Phase 3 NEWTON 2 study and the evaluation of its next steps. 

Even now, Credit Suisse considers Edge overvalued.

The Rating

Analyst Martin Auster downgraded the stock from Outperform to Underperform and bulldozed the price target from $17 to $1.

The Thesis

Edge announced that interim data for a treatment of aneurysmal subarachnoid hemorrhages has a low probability of achieving statistical significance compared to the standard of care, according to Credit Suisse. 

As Edge has no other products in clinical development, this effectively eliminates its immediate revenue opportunity.

The best case scenario is a $2 valuation, Auster said. The worst case: zero. 

"Our grey sky valuation of zero assumes that EDGE spends through its remaining cash and is unable to obtain additional funding," Auster said. 

Despite continued cash burn for severance packages and trial closure costs, reductions in both R&D and general and administrative expenses are seen to improve the firm’s bottom-line prospects this year. Credit Suisse anticipates a 2018 loss per share of $1.45 against prior estimates of $2.21.

Price Action

Edge Therapeutics shares were down 6.5 percent at the time of publication Thursday. 

Related Links:

Cantor Fitzgerald Names 8 Upcoming Biotech Catalysts

For Now, Traders Endorse Biotech Rally