RBC downgrades Applied Therapeutics as FDA rejects Govorestat, hacks price target

Investing.com -- RBC Capital Markets downgraded Applied Therapeutics Inc (NASDAQ:APLT) stock to "sector perform" from "outperform” citing increased risks after the U.S. Food and Drug Administration (FDA) rejected the company’s application for its experimental drug govorestat to treat galactosemia.

Shares of Applied Therapeutics plunged 75% to $2 in premarket trading on Friday.

RBC analyst Brian Abrahams in a note said the FDA’s issuance of a Complete Response Letter (CRL) for govorestat creates "significant uncertainties" about the drug’s future in the rare metabolic disorder, where no approved treatments exist.

Abrahams said the FDA may require an additional clinical trial with more definitive outcomes, even though the company had already expressed openness to a narrower label or accelerated approval based on existing data.

The analyst highlighted potential value in Applied Therapeutics' SORD deficiency program, which targets a larger patient population.

Tough doubts remain over whether the company can present a "convincing enough data package" to regulators, with a new drug application (NDA) submission expected only in the first quarter of 2025.

"There remain uncertainties as to whether APLT can assemble a convincing enough data package, and this will take time to play out," Abrahams said, as he hacked price target for Applied Therapeutics to $4 from $12.