AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) shares are sinking 8% after the firm announced what Canaccord analyst Neil Maruoka deems “another disappointment for Macrilen,” the biotech firm’s ghrelin agonist in development for use in evaluating adult growth hormone deficiency (AGHD). After the Phase III trial failed to meet its primary endpoint, the analyst reiterates a Speculative Buy rating on AEZS while chopping the price target from $7.50 to $5.50, which represents a just under 98% increase from where the shares last closed.

Maruoka underscores, “Recall that Æterna Zentaris had previously received a Complete Response from the FDA for Macrilen in November 2014 and the company was repeating the trial to support approval. Given the resources dedicated to the Macrilen program to date, we believe it is likely that Æterna Zentaris will discontinue development of this niche product to focus on the larger opportunity in cancer therapy Zoptrex. As a result, we have removed Macrilen from our valuation analysis; Macrilen contributed ~$1.80 to our overall valuation of $7.47; we are therefore lowering our target price to US$5.50 (from US$7.50).”

Looking ahead, “Our focus is now solely on the clinical data for Zoptrex, which is expected in Q1 2017. We view Zoptrex to be the key value-driver for Æterna Zentaris, representing the company’s most significant revenue opportunity going forward,” Maruoka concludes, believing “this is the end of the road for Macrilen.”

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, Neil Maruoka is ranked #4,301 out of 4,369 analysts. Maruoka has a 20% success rate and faces a loss of 34.6% in his yearly returns. When suggesting AEZS, Maruoka forfeits 16.6% in average profits on the stock.

TipRanks analytics demonstrate AEZS as a Strong Buy. Out of 3 analysts polled by TipRanks in the last 3 months, all 3 are bullish on AEZS stock. The 12-month average price target stands at $8.83, marking a 221% upside from where the stock is currently trading.

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