On Wednesday, Canaccord Genuity revised its stance on Cara Therapeutics (NASDAQ:CARA), downgrading the stock from Buy to Hold and slashing the price target significantly to $1.00 from the previous $10.00.
This adjustment followed the company's announcement that its oral difelikefalin (DFK) failed to show a meaningful clinical benefit compared to a placebo in the dose-finding Part A of its KOURAGE Phase 3 study for the treatment of notalgia paresthetica (NP).
The decision to downgrade comes after Cara Therapeutics revealed its intentions to discontinue the NP program and explore strategic alternatives due to the disappointing trial results. The company's announcement indicated that the oral DFK did not meet the expected outcomes in addressing the neurological basis of itch associated with NP.
Cara Therapeutics had previously seen encouraging Phase 2 proof-of-concept data for oral DFK in the treatment of NP, which was published in the New England Journal of Medicine.
These initial positive results had set expectations for the Phase 3 study. However, the latest findings have prompted Canaccord Genuity to reassess the stock's potential, leading to the current downgrade and price target reduction.
The company's focus on pruritus, or itching, particularly in NP, has been noted for its unpredictable nature in clinical trials. Despite the mechanism of oral DFK targeting the neurological aspect of itch, which is a significant factor in NP, the Phase 3 outcomes have not aligned with the earlier promising data.
Cara Therapeutics' stock rating has been affected by these developments, as reflected in Canaccord Genuity's updated investment perspective. The firm's reevaluation of the stock's outlook underscores the challenges faced by Cara Therapeutics in advancing its treatment portfolio for pruritus-related conditions.
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