KOD - Kodiak cut to Sell at Citi on potential setback to lead asset in August

Kodiak Sciences ( NASDAQ: KOD ) is trading lower in the pre-market after Citi downgraded the clinical-stage biotech to Sell from Neutral on Tuesday, citing a failure for the company’s lead candidate KSI-301 in a Phase 3 trial for patients with treatment-naïve retinal vein occlusion (RVO).

Noting a topline data readout expected from the trial in August, the analyst Neena Bitritto-Garg argues that the study named BEACON is unlikely to succeed.

Bitritto-Garg opens a negative catalyst watch on Kodiak ( KOD ) and expects the company shares to reach her price target of $6 in the event of the trial failure.

“Even if BEACON succeeds statistically, regulatory success is dependent on success in ongoing DME studies reading out in mid-2023,” the analyst added, arguing that weak BEACON data would raise concerns over the success of those late-stage diabetic macular edema studies.

For the long-term, Bitritto-Garg is uncertain whether KSI-301 could compete against, Vabysmo (faribimab), an injection developed by Roche ( OTCQX:RHHBY ) ( OTCQX:RHHBF ) for Wet AMD and DME.

In May, Morgan Stanley listed Kodiak ( KOD ) as one of the largest U.S. biotechs with negative enterprise values.

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