(Reuters) – Drug developer Celladon Corp said it expected to announce lay-offs and cost cuts as its stock plunged to an all-time low after the company’s lead experimental gene therapy to treat heart failure failed a key trial.
Celladon lost nearly 80 percent of its market value in early trading on Monday, with the stock falling to a record low of $2.76.
Data published on Sunday showed that Celladon’s Mydicar had missed the trial’s main and secondary goals, leaving the company “surprised and very disappointed”.
“There were no signs of treatment-related activity,” Roth Capital Partners’ Elemer Piros said, downgrading the stock to “neutral” from “outperform”.
Gene therapies aim to insert corrective genes into malfunctioning cells. Mydicar is a virus designed to deliver a gene that reconstitutes an enzyme responsible for heart muscle contraction.
The treatment was granted both “breakthrough” and “fast-track” status by the U.S. Food and Drug Administration.
Celladon anticipates announcing lay offs and other cost cuts due to the failure and expects to reveal detailed results from the study, CUPID2, in a few months, executives said in a conference call with analysts.
Chief Executive Krisztina Zsebo said the biotechnology company was evaluating all development programs related to Mydicar, including the heart failure trial.
The company has two more assets in preclinical development.
The CUPID2 data is unlikely to concern other developers of gene therapies, as the heart failure indication is more complicated than the monogenic disorders other developers are currently targeting, Wedbush’s David Nierengarten said.
Nierengarten downgraded Celladon to “neutral” from “outperform” and slashed his price target to $3 from $29.
Shares of UniQure NV, which is developing a gene therapy to fight heart failure with Bristol-Myers Squibb Co, fell about 5 percent in premarket trading, but rose nearly 4 about percent after markets opened.
While heart failure is a complex, multifactorial disease, UniQure’s target is potentially superior to Celladon’s, Roth Capital Partners’ Debjit Chattopadhyay said.
Up to Friday’s close, Celladon’s stock had fallen about 37 pct since March 30, when the company posted a bigger quarterly net loss due to a rise in operating expenses.
(Reporting by Natalie Grover in Bengaluru; Editing by Simon Jennings)
Source: Reuters Health