Maintaining Buy on AEON Biopharma: Potential of ABP-450 Despite Phase 2 Setback

Analyst Douglas Tsao of H.C. Wainwright reiterated a Buy rating on AEON Biopharma (AEON – Research Report), retaining the price target of $18.00.

Douglas Tsao has given his Buy rating due to a combination of factors which include the inherent potential of AEON Biopharma’s lead product, ABP-450, and its proven molecular action. Despite not meeting the primary endpoint in a recent Phase 2 trial due to an unexpectedly high placebo effect, ABP-450 demonstrated a consistent treatment effect. The FDA has already approved the primary endpoint for upcoming Phase 3 trials, and given the molecule’s success in aesthetics as Jeuveau, there’s a strong belief in its efficacy with a more suitable clinical trial design. This confidence is further bolstered by Botox’s success in a similar domain, which supports the likelihood of ABP-450’s effectiveness in future trials.

Furthermore, AEON Biopharma’s strategic options and financial position reinforce the Buy rating. The company has sufficient cash reserves until June 2024, and while it requires additional funding to progress, there are potential strategic opportunities to consider. The treatment of cervical dystonia with ABP-450 presents a lower-risk path to market, which could in turn aid in securing funding for the migraine program. The valuation also reflects a risk-adjusted revenue forecast considering the probability of success across different indications, while acknowledging the risks associated with clinical trials, competition, manufacturing dependencies, and funding requirements.

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AEON Biopharma (AEON) Company Description:

Priveterra Acquisition Corp is a blank check company. It is formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses.