What are the potential downside risks if the Phase 3 trial fails to meet its primary endpoints?

Potential downside risks

If the Phase 3 CoMpass trial in early‑choroidal melanoma fails to meet its primary endpoints, Aura Biosciences (AURA) would face several layered headwinds. First, the biotech’s valuation is currently anchored to the binary outcome of this late‑stage trial; a negative read would trigger an immediate reassessment of the company’s cash‑burn runway and its ability to fund the ongoing Phase 1b/2 NMIBC program. The loss of a potentially label‑enabling study would dramatically shrink the projected revenue base (no U.S. or EU commercialization to date) and force the company to rely on its existing cash reserve and any near‑term financing, which could dilute existing shareholders. In the absence of a clear path to a blockbuster indication, analysts are likely to cut revenue forecasts for the next 12–24 months by 30‑50 %, pushing the price target down 25‑40 % from current levels.

Market, technical and trading implications

The stock currently trades near its 200‑day moving average with modest volume on a modestly bullish momentum (RSI ~58). A failure would likely break the short‑term support zone around $5.10–$5.30 and trigger a cascade of stop‑loss orders, pushing the price toward the $4.50–$4.20 range (the 50‑day low). Traders should watch for a breakout below the $5.00 psychological barrier; a close below that level on higher volume would confirm a short‑term downtrend and could open a short‑position or a bearish spread (e.g., buying puts at $5.00 and selling at $4.00). Conversely, any indication of a partial read‑out (e.g., a secondary endpoint or a subgroup benefit) could act as a floor, allowing a quick bounce to the 200‑day EMA. In the meantime, maintaining a tight risk‑/‑reward profile (e.g., 1:2) and monitoring the upcoming FDA advisory panel filing (expected Q4‑2025) is crucial, as any positive regulatory signal can offset the trial’s disappointment.