MoonLake Immunotherapeutics reported mixed test results for its psoriatic arthritis treatment on Monday, sending top-rated MLTX stock crashing.
On today's stock market, MoonLake shares plummeted 29.1% to 36.35.
The company tested its psoriatic arthritis treatment in 207 patients. After 12 weeks, patients who received MoonLake's drug, sonelokimab, showed statistically significant improvements. The company compared sonelokimab to a placebo and AbbVie's psoriatic arthritis treatment, Humira. Sonelokimab belongs to a class of drugs that block a cytokine called IL-17.
However, Leerink Partners analyst Thomas Smith noted that there was an unexpectedly high placebo response.
"We expect some volatility in the stock this morning, based on unexpectedly high placebo response rates that will be a focus of investor debate going forward," he said in a report. "However, we think the sonelokimab absolute response rates and comparison vs. the Humira active control arm, where sonelokimab outperformed numerically across all measures, are compelling."
Still, the news sent MLTX stock to its lowest point since mid-June. MoonLake stock has a perfect IBD Digital Relative Strength Rating of 99. This means shares rank in the top 1% of all stocks when it comes to 12-month performance.
MLTX Stock: A De-Risked Asset
MoonLake tested two doses of its drug using induction: 60 milligrams and 120 milligrams. Almost half of patients — 46% at the low dose and 47% at the high dose — showed at least a 50% improvement in symptoms. Leerink's Smith noted 20% of placebo recipients met the same bar.
But he kept his outperform rating on MLTX stock, noting the response rates to sonelokimab were the "highest among any competing agent."
Bullishly, 29% and 26% of low-dose and high-dose patients, respectively, reached a 70% improvement in symptoms.
As MoonLake expected, patients who received a lower, 60-milligram dose of sonelokimab without induction didn't show statistically significant improvements. Induction involves loading a patient with medicine to eliminate as much of the disease as possible before switching to a more moderate maintenance dosing regimen.
Smith says MoonLake's drug looks likely to address multiple diseases similar to psoriatic arthritis.
"In looking across the breadth and safety data to date, we believe sonelokimab represents a strong option in psoriatic arthritis and (a skin condition called) hidradenitis suppurativa with MoonLake well positioned to capitalize on the fundamental and strategic value of having a de-risked IL-17 agent entering late-stage development," he said.
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