ProNAi Therapeutics Inc. (NASDAQ: DNAI) has triggered stock downgrades and potential litigations after it said it was discontinuing development of its drug compound known as PNT2258. A number of law firms have announced that they are investigating the company for potential violation of securities laws. At least two equity research firms have also downgraded their ratings on the stock.
Khang & Khang LLP announced in a press release that it was investigating ProNAi Therapeutics Inc (NASDAQ:DNAI) to see whether the company and its officers breached security laws by way of communicating misleading information. The law firm asked investors who might have useful information or want to be part of the litigation to contact it.
The Law Offices of Howard G. Smith also said that it was investigating ProNAi with regards to potential violation of securities laws. The firm cited that on June 6, ProNAi announced that it was halting the development of PNT2258. The Law Offices of Howard G. Smith also called on investors interested in the investigations to get in touch.
Analysts at Jefferies appeared to lose confidence in the future of ProNAi Therapeutics Inc (NASDAQ:DNAI) after the company said it was suspending work on PNT2258. The firm downgraded its rating on the stock to a HOLD from a BUY. The same move was made by SunTrust, which also downgraded the stock to NEUTRAL from a BUY.
What happened to ProNAi Therapeutics Inc. (NASDAQ: DNAI)?
ProNAi Therapeutics Inc. (NASDAQ: DNAI) said that data from Phase 2 study of PNT2258 weren’t compelling enough to justify continued work on the compound. According to the company’s CEO, Nick Glover, PNT2258 showed modest efficacy in the mid-stage trial. However, after analysis of the results, the management has concluded continued work on PNT2258 isn’t justified.
Although ProNAi Therapeutics Inc. (NASDAQ: DNAI) is ending work on PNT2258, it has other candidates such as PNT141 to focus on. Additionally, the CEO said that in the future they want to continue to work toward widening and diversifying the pipeline. Given the company’s strong balance sheet, the management hopes that the company will quickly overcome the setback caused by the discontinuation of PNT2258.