RAIN - Rain Oncology downgraded on Wall Street after Phase 3 setback

2023-05-23 09:17:14 ET

Rain Oncology ( NASDAQ: RAIN ) continued to fall in the pre-market Tuesday after multiple analysts downgraded the company on its decision to halt studies for its lead asset, milademetan in liposarcoma, following a Phase 3 setback.

RAIN fell ~88% on Monday after the precision oncology company announced its plans to discontinue milademetan trials for dedifferentiated liposarcoma (LPS) citing failure in its Phase 3 MANTRA trial to meet the primary goal.

"We think this negative outcome is a disappointing surprise, given the previously published positive Phase I clinical data on milademetan's potential in LPS," Guggenheim analyst Michael Schmidt wrote.

The analyst downgrades the stock to Neutral from Buy, noting the negative investor readthrough from MANTRA data to other potential indications for milademetan and arguing that the company's pipeline indicates no other catalysts.

While downgrading RAIN to Market Perform from Outperform, Oppenheimer sounded optimistic, noting yesterday's selloff and the company's $110M cash level at Q1 end, which, according to the analyst Jeff Jones "provides fuel for BD and M&A."

"We anticipate hearing from management soon on further plans for milademetan and the company," Jones wrote.

Piper Sandler's Joseph Catanzaro downgraded RAIN to Neutral from Overweight with a price target of $1.75. Catanzaro argues it is "hard to see any viable paths forward for the program inside/outside dedifferentiated liposarcoma. As such, we are removing all value for milademetan."

H.C. Wainwright and Citi were among other investment firms to downgrade Rain ( RAIN ) to Neutral from Buy ratings in the wake of the setback.

More on Rain

• Rain Therapeutics to change name to Rain Oncology
• Rain Oncology resumed with a buy at Roth Capital on liposarcoma candidate milademetan

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