Analyst’s Rating Update Following Alcobra’s (ADHD) FDA’s Clinical Hold

By Carrie Williams

HealthcareThe share prices of the emerging pharmaceutical company Alcobra Ltd (NASDAQ: ADHD) had been plummeting recently and is currently near its 52-week low. This massive fall of more than 50% in few short weeks was triggered when the FDA placed a full clinical hold on the phase III trial of Alcobra’s Attention-Deficit/Hyperactivity Disorder drug MDX (Metadoxine Extended Release). FDA had uncovered an adverse neurological impact of Alcobra’s ADHD proprietary treatment candidate, MDX, during a pre-clinical trial.

WBB Securities’ analyst Steve Brozak has released a note today on the matter, adopting a ‘wait and watch’ approach as he believes that the current FDA hold lacks clarity. According to the communication from Alcobra, the clinical hold letter from FDA did not reference any clinical safety data observed in the MEASURE trial or in previous human studies with MDX. WBB upgraded the rating on Alcobra to Hold rating today while maintaining their previous price target of $1.90. This price target is an upside of 0.52% from the current price of $1.88.

Brozak believes that the current ambiguity in measuring the MEASURE response by FDA might be clarified in the upcoming corporate update conference call and webcast scheduled for November 15th.  The company had started earlier that they “will continue to work rapidly and diligently with the FDA to seek the removal of the clinical hold and will provide an update following its meeting with the Agency”. The financial results for the third quarter ended September 30, 2016, would also be announced during this call. ADHD had reported a Net Loss of ($5.8 million) in its Q2 results, a decrease of -13.7% from the previous quarter. No guidance was given. The Q2 EPS of -$0.21 had only just beat the estimates by $0.01.

According to analysts’ data polled by TipRanks.com, Alcobra has an overall consensus rating of Moderate Buy. The average analyst price target for the stock is $6.90 which is an upside of 263.16% from the current levels.