SVB Leerink downgraded ResTORbio (NASDAQ:TORC) to “market perform” from “outperform” and slashed its price to $2 from $40 after a failure of first of the company’s two ongoing Phase 3 trials in respiratory infection prevention (PROTECTOR1).
In mid-morning trading on Nov. 15, shares of ResTORbio were quoted at $1.34, down $6.61, or 83%, in heavier than normal trading.
“Beyond [Nov. 15’s] trading, investors are unlikely to give the company much credit for its further development efforts in this or any other indication, and the timelines for value realization in such indications, such as Parkinson’s disease, are likely to be long and the cash requirements substantial,” writes analyst Geoffrey Porges.
ResTORbio cash balance at the end of the third quarter of 2019 was $117-million, or $3.50 a share, but “we expect the stock to trade below that value given the lack of value further spending is likely to generate,” he added.
