H.C. Wainwright downgraded PolarityTE (NASDAQ:PTE) to “neutral” from “buy” and removed its price target, citing the clinical and regulatory risk from a strategy shift for its wound closure product, SkinTE. The stock closed at 93 cents on May 1.
On April 30, PolarityTE unveiled a plan to shift its strategic focus by minimizing its commercial operations for SkinTE and pursuing a biologics license application (BLA) instead.
Analyst Swayampakula Ramakanth said that based on voluntary discussions with the FDA, the company believes that a successful BLA would add more value to SkinTE and help achieve a wider commercial adoption. Currently, SkinTE is being detailed for burn wounds.
“While we believe a potential regulatory approval could accelerate the adoption of SkinTE, the plan to pursue a BLA substantially increases the clinical and regulatory risks associated with the product,” he added.
The company currently is conducting two, 100-patient randomized controlled trials to evaluate SkinTE for the treatment of diabetic foot ulcers and venous leg ulcers and intends to submit data from the two trials to the FDA as part of the clinical data package to support a BLA.
An interim analysis of the foot ulcer study is expected in the second half of 2020 and the leg ulcer study by year-end. As a result, “we believe management may not be able to release meaningful clinical data or finalize a regulatory pathway for SkinTE until the end of 2020,” Mr. Ramakanth said.
