Shares in Versartis Inc (NASDAQ:VSAR) fell more than 85% today, following the news that its experimental drug somavaratan failed to achieve non-inferiority in the ITT population for the Phase 3 VELOCITY trial in Pediatric Growth Hormone Deficiency (GHD). The news was a surprise for many who had high hopes based on the drug’s success in earlier trials.
In reaction, Canaccord analyst John Newman slashed his price target to $9.00 (from $28.00), while keeping his rating at Buy. The analyst adjusted the probability of regulatory approval to 10%, and awaits additional details on the clinical data and whether there is a chance to submit the current dataset (unlikely scenario at this time).
Newman wrote, “The per protocol patient population demonstrated non-inferiority, but an ITT analysis was defined as the primary endpoint, lowering the chances of approval […] Initial data suggest good safety for VRS-317, a primary concern for FDA when reviewing pediatric drugs. VRS-317 showed a lower discontinuation rate vs. once-daily Genotropin, and we await further details on safety. We reiterate our belief that the very clean safety profile for VRS-317 is highly attractive, and would be viewed positively by FDA if Versartis chooses to submit the VELOCITY dataset for approval.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst John Newman has a yearly average return of 4.9% and a 44% success rate. Newman is ranked #881 out of 4657 analysts.
Out of the 7 analysts polled in the past 12 months, 4 rate Versartis stock a Buy, while 3 rate the stock a Hold. With a return potential of 825%, the stock’s consensus target price stands at $24.75.