Aardvark Therapeutics, Inc., the Healthcare sector company, was revisited by a Wall Street analyst on May 15. Analyst Tazeen Ahmad from Bank of America Securities downgraded the rating on the stock to a Sell and gave it a $4.00 price target.
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Tazeen Ahmad has given his Sell rating due to a combination of factors centered on the FDA’s clinical hold of Aardvark Therapeutics’ lead program, ARD-101, and the resulting uncertainty around development timelines. The company has halted trials after cardiac issues were observed at higher doses in healthy volunteers, and although management is in active dialogue with the FDA and plans to unblind phase 3 HERO and extension data in Prader-Willi syndrome, no firm schedule has been communicated.
Ahmad also sees added risk from a changing regulatory environment and intensifying competition from products like Soleno’s Vykat XR and Rhythm’s setmelanotide, which could erode AARD’s future market opportunity. Reflecting these concerns, she lowers the probability of success and delays the assumed launch for the PWS program, removes value previously assigned to other indications and terminal growth, and raises discount rates, which collectively reduce her price objective from $18 to $4, supporting a Sell stance.
In another report released on May 15, Morgan Stanley also downgraded the stock to a Sell with a $3.00 price target.