Going long on Otonomy Inc (NASDAQ:OTIC) stock, which has lost more than 80% this week, has been a painful lesson for investors who have attempted to catch this falling knife.
Otonomy shares took a pounding after the drug maker announced disappointing results from a pivotal Phase 3 trial for its vertigo drug Otividex. Specifically, the trial missed its primary endpoint which was the count of definitive vertigo days by Poisson Regression analysis (p=0.62). Patients in both the Otividex and placebo groups showed similar reductions in the number and severity of vertigo episodes during the three month observation period.
In reaction, SunTrust analyst Edward Nash slashes his price target on OTIC to $15.00 (from $45.00), while reiterating a Buy rating on the stock. “This valuation is purely based on Otiprio for its currently approved indication and the two additional label expansion indication being sought […] Even with the Meniere’s failure, we view shares as having been significantly oversold,” the analyst notes. (To watch Nash’s track record, click here)
“With the failure of the Meniere’s program, we now view Otonomy as a pure play spec pharm company. We have not changed our revenue estimates for Otiprio in any way and only the indications currently approved or being developed for Otiprio are in our model,” the analyst continued.
Where does the rest of the Street side on this speculative pharma player? It appears cautiously optimistic with TipRanks analytics demonstrate OTIC as a Buy. Out of 4 analysts polled by TipRanks (in the last 3 months), 2 are bullish on Otonomy stock ,while 2 remain sidelined. With a return potential of nearly 250%, the stock’s consensus target price stands at $12.00.