On Friday, RBC Capital adjusted its stance on shares of Applied Therapeutics (NASDAQ:APLT), reducing the price target for the company's shares to $1.50 from the previous $4.00, while maintaining a Sector Perform rating. The stock currently trades at $0.91, having fallen 77% over the past six months and now sits near its 52-week low.
According to InvestingPro analysis, the stock's RSI suggests oversold conditions. This move comes in the wake of a Warning Letter from the FDA, which the firm believes introduces additional concerns regarding the integrity of the data and heightens the risk profile for the company's drug, govorestat.
The analyst from RBC Capital noted that while there are some indications of the drug's efficacy, the recent FDA communication complicates the development trajectory for govorestat across various applications.
Despite the FDA's increased leniency towards rare disease drug approvals, the uncertainty brought about by the Warning Letter is expected to influence the stock's near-term trading behavior, aligning it closer to the newly established base.
With a market capitalization of just $106 million and significant volatility (Beta 1.72), investors seeking deeper insights can access comprehensive analysis through InvestingPro's detailed research reports.
The adjusted price target reflects the current assessment of the situation, taking into account the speculative risks now associated with Applied Therapeutics. The company's development path for govorestat, a key asset in its pipeline, has evidently been affected by regulatory scrutiny, prompting the analyst to recalibrate the expected performance of the stock.
The Sector Perform rating suggests that RBC Capital anticipates the stock to perform in line with the sector, despite the lowered price target. The designation of 'Speculative Risk' indicates a higher degree of uncertainty and potential volatility in the stock's future price movements.
Applied Therapeutics, which is focused on developing treatments for patients with rare and serious diseases, now faces increased scrutiny as it navigates the FDA's concerns. The firm's commentary underscores the challenges ahead for the company as it works to address the issues raised by the regulatory body.
In other recent news, Applied Therapeutics has undergone significant leadership changes, with the appointment of John H. Johnson as Executive Chairman and Les Funtleyder as Interim CEO. The company has reported a fiscal first quarter revenue of $60.7 million, a 67% increase year-over-year, and an adjusted net loss of $21.6 million.
Regulatory hurdles have been encountered with the withdrawal of its Marketing Authorization Application for govorestat in Europe and a delay in its New Drug Application submission to the FDA for the treatment of SORD Deficiency.
Analysts from Baird and RBC Capital Markets have downgraded the company's stock, yet acknowledge the potential value in the company's SORD deficiency program. These are among the recent developments in Applied Therapeutics.
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