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Kodiak cut to Neutral at UBS as lead asset dropped from trials

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Kodiak Sciences (NASDAQ:KOD) traded lower for the fifth straight session on Thursday after UBS downgraded it to Neutral from Buy, citing its decision to discontinue studies for the lead candidate tarcocimab.

The company’s shares plunged ~46% on Monday after announcing the decision, which followed a failure in two Phase 3 trials for the candidate in diabetic macular edema.

Removing tarcocimab from her model for the stock, UBS analyst Eliana Merle downgraded KOD and slashed her price target to $4 from $15 per share.

While KOD trades below cash, the analyst is skeptical about the company’s plans given the termination of the lead program and limited visibility on its catalyst outlook.

However, there can be upside if the management returns cash to investors, Merle argued, adding that the company has to deal with ongoing early-stage development work and wind down activities related to tarcocimab.

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