HCW downgrades Inotek to neutral

H.C. Wainwright downgraded Inotek Pharmaceuticals (NASDAQ:ITEK) to “neutral” from “buy” and slashed its price target to $2 from $7 after a failed Phase 2 trial. The stock closed at 96 cents on July 11.

A fixed-dose combination of Inotek’s trabodenoson and latanoprost failed to separate significantly from latanoprost in terms of intraocular pressure reduction at the eight-week time point.

“As a result, the company has prudently decided not to take trabodenoson forward into Phase 3 testing in glaucoma, but will instead be most likely focusing on ophthalmic conditions of the back of the eye, where trabodenoson is purported to be more active,” writes analyst Corey Davis.

Despite not improving significantly upon latanoprost alone, Mr. Davis said trabodenoson has still clearly shown some efficacy signals and could prove effective in an orphan condition, called non-arteritic anterior ischemic optic neuropathy (NAION), a form of sudden vision loss that has been partially associated with the use of erectile dysfunction medications.

“While trabodenoson could show utility in NAION, pre-clinical data in this potential indication alone is certainly not enough to sustain a public company,” he added.

Inotek has hired Perella Weinberg Partners as a strategic advisor and will look at all options, “the most likely of which we think would be a reverse merger with a private company (presumably in the ophthalmology space) to put its $109-million in cash to work with new assets,” Mr. Davis said.