Biotech Bombshell: MoonLake (MLTX) Shares Tumble 85% on Trial News

Stock Shock: On Monday Sep 29, 2025, MLTX plunged ~85% pre-market after releasing mixed Phase 3 trial results (VELA program) ^[1] ^[2]. It fell from ~$62 (near its 52-week high) to under $8, collapsing the market cap from ~$3.9B to roughly ~$0.5B ^[3] ^[4].
Friday Rally: Just days earlier (Sep 26), MLTX had surged ~10–10.5% to $62.33 on takeover buzz and clinical catalysts ^[5]. Reuters/FT reports of Merck interest (>$3B buyout talks) and eagerly-anticipated HS trial data had driven optimism ^[6] ^[7].
Financials: MoonLake ended Q2 2025 with ~$425M in cash (plus a $500M Hercules credit line) ^[8] ^[9]. R&D expenses rose to $49.8M in Q2 (versus $36.5M prior quarter), yielding a net loss of $56.1M (≈$0.87/share) ^[10] ^[11]. The company’s cash runway is extended into 2028 by the Hercules deal ^[12] ^[13].
Pipeline – HS & Beyond: MoonLake’s lead drug, sonelokimab (an IL-17A/F nanobody), is in late-stage development for inflammatory skin/joint diseases. Ongoing trials include Phase 3 VELA-Teen (adolescent HS), Phase 3 IZAR (psoriatic arthritis), Phase 2 LEDA (palmoplantar pustulosis), and Phase 2 S-OLARIS (axial spondyloarthritis) ^[14] ^[15]. Key catalysts are due: 52‑week VELA follow-up, LEDA topline (expected Q4’25), S-OLARIS (Q1’26), VELA-Teen and IZAR (H1’26) ^[16] ^[17].
VELA HS Trial Results: In combined VELA-1/2 data, primary endpoint significance was mixed. VELA-1 met HiSCR75 (17-point improvement over placebo, p<0.001) ^[18], but VELA-2 showed only a 9-point gap (p=0.053) – a “near-miss” caused by an unusually strong placebo response ^[19] ^[20]. Using the treatment-policy analysis, sonelokimab responses were 35–36% vs 18–26% for placebo (statistically significant) ^[21]. No new safety signals were seen (no suicidality issues) ^[22]. MoonLake said it will “seek to confirm the path to registration in HS” with regulators as VELA continues to 52 weeks ^[23].
Analyst Ratings: Before the news, most analysts were bullish. Wedbush “Outperform” (PT $80) and Guggenheim “Buy” ($80) were confident in SLK and the HS readout ^[24] ^[25]. Clear Street maintained a Buy with a $108 target ^[26]. After the trial disappointment, firms turned cautious: Stifel cut MLTX to Hold (PT $13 from $77) and slashed its success probability ^[27], calling results “significantly worse than expected”. RBC Capital dropped to “Sector Perform” ($10 from $67), calling the outcome a “near-miss” and an “uncompetitive” effect size ^[28].
M&A Rumors: MoonLake’s takeover chatter has been rampant. In June 2025 Reuters/FT reported that Merck had held talks for a >$3B acquisition ^[29]. On Sep 10, social-media buzz (StockTwits) suggested renewed Merck interest ^[30]. These rumors repeatedly drove MLTX spikes (Finimize noted a 16% premarket jump on Merck speculation in June ^[31]). However, analysts now warn the mixed VELA data may dampen acquisition appetite ^[32] ^[33].
Strategic Position: The company raised significant non-dilutive funding (Hercules $500M) to bolster its balance sheet ^[34]. MoonLake’s CEO hailed Q2 as “another strong quarter,” citing narrowed HS readout timing and encouraging PPP data that “derisks” development ^[35]. The CFO emphasized MoonLake’s “robust financial position” from the Hercules deal, allowing it to fund a 2027 launch without dilution ^[36]. MoonLake also formed a technology partnership with Komodo Health ^[37] to enhance R&D targeting.
Market Context & Competition: HS affects ~2% of people (~2M Americans) and is a highly unmet condition; the market is projected at ~$15 billion by 2035 ^[38]. Only AbbVie’s Humira is approved for HS today – but new entrants loom. Notably, UCB’s IL-17 inhibitor bimekizumab (BIMZELX) received FDA approval for HS in late 2024 ^[39], becoming the first IL-17A/F drug on the market. MoonLake’s SLK will compete with IL-17 agents like bimekizumab and Novartis’s secukinumab if they enter HS. (In PsA, SLK will face many established biologics.) The broader biotech sector is volatile: MLTX briefly outperformed peers on its unique catalysts ^[40], but investor confidence now hinges on binary events (HS data, M&A news) ^[41] ^[42].
Investor Outlook: Analysts’ 12-month price targets averaged ~$79 (range $65–$108) ^[43] before the latest news – implying ~28% upside from pre-crash levels. With VELA-2 missing significance, sentiment has split. Bulls note that SLK still showed efficacy, broader pipeline catalysts are upcoming, and cash is ample. Bears point to tougher comparisons (UCB’s new HS drug, high hurdle for FDA approval) and question SLK’s durability. Retail chatter on platforms (StockTwits sentiment spiked bullish even after the crash ^[44]) suggests polarized views. In the near term, key factors will be FDA feedback on VELA data, how MoonLake addresses the second trial’s miss, and finalizing topline 52-week VELA outcomes. Longer term, success in HS and PsA could transform MLTX – but failure risks irreversible loss in value.

Sources: Company filings and press releases ^[45] ^[46]; financial media (Reuters, Investing.com, Stocktwits, Seeking Alpha) ^[47] ^[48] ^[49]; market data services ^[50] ^[51]. All figures and quotes are from cited reports.