- San Diego biotech AnaptysBio was worth about $700 million less Friday morning than when markets closed Thursday, after the failure of the company's most important drug candidate sparked a sharp sell-off on Wall Street.
- In what one analyst called a "worst case scenario," AnaptysBio's experimental therapy etokimab failed to meet its goal in a Phase 2b trial testing the drug for moderate-to-severe atopic dermatitis.
- "We are surprised and very disappointed by the topline results of the ATLAS trial," said company CEO Hamza Suira in a Friday statement. As a result, AnaptysBio will delay initiation of another mid-stage study in a severe type of asthma while it waits for fuller data from the dermatitis trial.
Some cracks in AnaptysBio's pitch to investors appeared in March 2018, when the company's explanation of data for etokimab as a peanut allergy treatment sparked investor questions and led at least one analyst to downgrade the stock.
AnaptysBio later deprioritized development of etokimab for peanut allergy, focusing instead on atopic dermatitis and eosinophilic asthma. But both programs are now in question following the Phase 2 setback, which saw all tested doses of etokimab miss the study's primary endpoint.
"Today's all-out failure of etokimab in its Phase 2 ATLAS AD study calls into question its ability to demonstrate any efficacy in other atopic diseases and is no doubt the worst case scenario for [AnaptysBio], in our view," wrote Stifel analyst Derek Archila in a Nov. 8 note to investors.
"Management will now have to go back to the drawing board since etokimab was its most valuable asset."
Trust in management might not be all that high, however. Shares in AnaptysBio fell by 70% to trade at about $11 apiece Friday, significantly less than the $16 each would be worth when considering only the $444 million in cash held by the company. Such a valuation suggests investors don't see many paths forward for AnaptysBio to use its money effectively.
RBC Capital Markets analyst Kennen MacKay, meanwhile, questioned why company executives didn't hold a conference call to discuss their plans.
"We're surprised by this outright failure as well as the lack of an investor call to discuss the most significant development in the history of the company," MacKay wrote in a Nov. 8 investor note.
AnaptysBio said it would provide a detailed update on etokimab and the ATLAS study in the first quarter of 2020.
Bad news for AnaptysBio proved a lift to fellow California-based biotech Dermira, which is developing a competing drug for atopic dermatitis. Called lebrikizumab, the experimental therapy works via a different target than etokimab.
Shares in Dermira rose by 25% Friday.
Both companies sought to repeat the success of Sanofi and Regeneron in developing Dupixent (dupilimab), approved in atopic dermatitis and other inflammatory diseases. AnaptysBio's results indicate the two larger drugmakers have one less competitor to worry about.
Correction: A previous version of this article misattributed a quote from Stifel analyst Derek Archila.