On Thursday, H.C. Wainwright adjusted its outlook on AEON Biopharma, Inc (NYSE:AEON), reducing the price target to $6.00 from the previous $18.00, while maintaining a Buy rating on the stock. The adjustment follows recent challenges encountered by the company's migraine treatment program, ABP-450.
Despite two failed studies attributed to high placebo rates, which the firm considers unfortunate, AEON Biopharma faces the necessity of securing additional funds due to its limited capital reserves.
As of the end of the first quarter of 2024, AEON reported having approximately $1.5 million in cash and cash equivalents. In response to this pressing financial situation, AEON Biopharma secured the second and final portion of funding from a private placement in April 2024.
This agreement with Daewoong Pharmaceutical provided $15 million in senior secured convertible notes, meant to support clinical studies and corporate operations through June 2024.
The optimism for AEON's financial prospects stems in part from ABP-450's established profile, which is identical to the active ingredient in Evolus' (NASDAQ:EOLS) successful aesthetic product, Jeuveau.
Despite the setbacks, the firm believes that financing options will become available to AEON, although positive outcomes from clinical trials would have facilitated this process at potentially higher valuations.
AEON's recent announcement revealed that ABP-450 did not meet the primary endpoint in the preliminary topline results from the Phase 2 interim analysis. The company continues to scrutinize the interim data and is considering various directions for its clinical pipeline concerning ABP-450. H.C.
Wainwright remains confident in the potential of ABP-450 and awaits further updates on the company's business plans. Due to the recent study outcomes, the firm has lowered its probability of success in the migraine indication to 10%, a decision reflecting timing risks rather than doubts about the drug's efficacy. Consequently, this reassessment has led to the lowered price target.
InvestingPro Insights
Following H.C. Wainwright's price target adjustment for AEON Biopharma, Inc (NYSE:AEON), real-time data from InvestingPro underscores the company's precarious financial position. AEON's market capitalization stands at a modest $61.28 million, and the company's recent performance metrics paint a challenging picture. With an adjusted P/E ratio for the last twelve months as of Q4 2023 at -0.9, AEON is not just unprofitable but also has a negative earnings per share (EPS) of -$0.39, indicating significant losses. Furthermore, the company's stock price has experienced a steep decline, trading at just 8.85% of its 52-week high and closing previously at $1.63.
InvestingPro Tips highlight critical issues for potential investors. AEON is currently in oversold territory according to its RSI, and it is quickly burning through cash with short-term obligations exceeding its liquid assets. Additionally, AEON's net income is expected to drop this year, and analysts do not anticipate the company will be profitable within this timeframe. With a total of 15 additional InvestingPro Tips available, investors can gain deeper insights into AEON's financial health and stock performance by visiting https://www.investing.com/pro/AEON. For those seeking comprehensive analysis, use coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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