STSA - Satsuma cut to neutral at Mizuho following migraine drug failure

• Mizuho has downgraded Satsuma Pharmaceuticals ( NASDAQ: STSA ) to neutral from buy after migraine therapy STS101 failed in a phase 3 trial .
• The firm also lowered its price target to $2 from $14 (194% upside based on Monday's close).
• The stock is down ~7% in Tuesday morning trading after falling ~83% on Monday.
• Analyst Uy Ear said that without efficacy data from the co-primary endpoints, the potential of STS101 "diminishes substantially."
• Ear added that Satsuma ( STSA ) could submit an NDA from STS101 based on two other phase 3 trials.
• "Whether STS 101 moves into NDA filing stage will likely depend on third-party interest in the asset, and it looks like submission is unlikely to take place without an alternative option," Ear wrote. "The sale of STS101 or of the entire company (vs licensing deal for STS101) makes the most strategic sense for management."
• Seeking Alpha's Quant Rating views Satsuma ( STSA ) as a hold.

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