Dermira Inc (NASDAQ:DERM) has left investors sharply disappointed with a double whammy: two failed clinical final-stage trials in acne. The stock has been sent plummeting almost 64% to the market floor on back of the negative acne data, where the company’s DRM01 asset never met either primary endpoint.
One bull is fleeing from the scene of the biotech disaster: Mizuho analyst Irina Rivkind Koffler downgrades from a Buy to a Neutral on DERM stock while slashing the price target from $39 to $9, which aligns with current levels. (To watch Koffler’s track record, click here)
Just how much confidence has Koffler lost in DERM? “We no longer view a takeout as likely after the company’s key program in acne failed in late stage trials,” explains the analyst.
Koffler continues, “The company reported that DRM01 did not show any encouraging efficacy signals on any of the endpoints measured (lesion counts and investigator’s global assessment). The data were so negative in fact, that unlike Novan, there was nothing salvageable in the data set and the entire program will be discontinued. This outcome is highly surprising given that two prior Phase II trials were positive and consistent. This was a binary event for the company, in our view […] Dermira does have a near-term launch in hyperhidrosis (a smaller product), but its next significant program in atopic dermatitis is still several years from the market.”
In a nutshell, “We don’t see any upside from a potential takeout until there is increased visibility in the atopic dermatitis landscape […] We don’t expect any M&A interest in Dermira solely over its hyperhidrosis asset,” the analyst surmises, saying to put it simply: “we just don’t expect the stock to work in 2018.”
TipRanks highlights a strong bullish analyst consensus betting on Derma’s market opportunity. Out of 5 analysts polled in the last 3 months, 4 rate a Buy on DERM stock while 1 maintains a Hold. The 12-month average price target stands at $32.50, boasting a massive upside potential of nearly 258% from where the stock is currently trading.