12:16 PM EST, 12/02/2024 (MT Newswires) -- Applied Therapeutics ( APLT ) faces uncertainty after the US Food and Drug Administration rejected the company's new drug application for its drug candidate govorestat in classic galactosemia, a genetic metabolic disorder, due to deficiencies in the clinical application, UBS Securities said in a report Monday.

The company disclosed last week the health regulator's decision.

"We think unknowns around the deficiencies resulting in the [FDA's complete response letter] create uncertainty for the shares," UBS said.

Applied Therapeutics ( APLT ) previously said it plans to meet with the FDA to discuss potential NDA resubmission or appeal for govorestat, and still expects to file an NDA for the drug candidate to treat another genetic disorder sorbitol dehydrogenase, or SORD, deficiency in Q1 2025.

"We model 25% and 35% probability of success to approval for govorestat in galactosemia and SORD, respectively," UBS said. "Although galactosemia and SORD are rare conditions where we see a high unmet need (no approved therapies), we see uncertainties around the regulatory path forward from here."

However, UBS said it sees significant upside potential for the shares if govorestat is approved for SORD or galactosemia.

UBS downgraded Applied Therapeutics ( APLT ) to neutral from buy, and cut its price target to $2 from $13.

Shares of the company were down about 11% in recent Monday trading.

Price: 1.81, Change: -0.22, Percent Change: -10.84