B. Riley Securities downgraded the development stage biotech Gain Therapeutics, Inc. (NASDAQ:GANX) to Neutral from Buy on Friday, noting a material delay in the company's plans to seek regulatory clearance to start clinical trials for the Parkinson's disease lead candidate, GT-02287.
Citing the company's Q2 2022 results, the analysts led by Mayank Mamtani argue that ongoing and unexpected formulation work has pushed back a potential submission for an Investigational New Drug application for the candidate in the U.S.
"This implies the unfortunate challenge of GANX's early-stage pipeline failing to deliver on any meaningful clinical data catalysts within the next 12-month time period," the team added.
According to the analysts, that will limit the window to seek sizable non-dilutive financing, a focus of investors in the wake of the company's strong pre-clinical data to support its SEE-Tx platform approach.
Slashing the GANX price target to $5 from $11 per share, B, Riley says the recent rally in company shares does not reflect "the lack of certainty to avenues remaining for maintaining a healthy balance sheet."
GANX has added ~49% since mid-May outperforming the broader biotech space, as shown in this graph.