SVB Securities downgraded Aligos Therapeutics (NASDAQ:ALGS) to “market perform” from “outperform” and slashed its price target to $3, which is close to cash, from $7, citing a slow catalyst path ahead with a legal overhang. The stock closed at $1.24 on May 4.
Aligos is targeting antiviral therapies for chronic hepatitis B (CHB) but analyst Roanna Ruiz, Ph.D., writes that CHB is a high-risk/high-reward space, “so we did not change our 15% probability of success for Aligos’ platform.”
She said a larger portfolio can mitigate some development risk, but Aligos has had multiple setbacks in terminating the STOPS and ASO programs. “We think it may take significantly more time to reposition the portfolio and pursue CHB combination regimens, as these two assets were the most advanced and potential ‘backbones’ for future regimens.”
Dr. Ruiz said the company didn’t update a lawsuit by Janssen filed in March 2022 during its first quarter earnings call. “While management doesn’t seem concerned, the lawsuit could still put financial pressure on Aligos with a long and drawn-out litigation, and more importantly, it could discourage and delay potential partnerships or in-licensing opportunities,” she added.