- Shares in Versartis Inc. tumbled more than 85% Friday morning after the California biotech reported its experimental human growth hormone somavaratan came up short compared to a rival drug in a Phase 3 trial.
- Designed to treat pediatric growth hormone deficiency, somavaratan given twice monthly failed to demonstrate non-inferiority to Pfizer Inc.'s once-daily Genotropin in the study's intent-to-treat population.
- "We are very surprised and disappointed to learn the outcome of the VELOCITY trial," said Versartis CEO Jay Shepard. "Somavaratan showed height velocity in the range we had hoped, but it was not sufficient to demonstrate non-inferiority in this trial."
Versartis said it would continue to review the results of the trial outcome and plans to provide a corporate update later this year. While somavaratan failed to match Genotropin (somatropin) in overall study group, the company did note the drug met the threshold for non-inferiority in the "per protocol population."
But the outlook for Versartis looks a lot less bright. Somavaratan is the focus of the company's research efforts, and the setback in VELOCITY throws its plans into doubt.
"While management only reported the top-line results and continues to review the entire data, the negative outcome appears unequivocal and the pathway forward is unclear," wrote Cowen & Co. analyst Ken Cacciatore in a Sept. 22 note.
Versartis designed somavaratan as a long-acting recombinant form of human growth hormone, hoping to lessen the burden of the daily injections needed for patients taking currently marketed drugs like Genotropin or Novartis AG's Omnitrope (somatropin).
The VELOCITY study tested somavaratan specifically in a pediatric population. Versartis also has been developing the drug for adult growth hormone deficiency, with a Phase 2 study currently ongoing. As Cowen's Cacciatore notes, the failure announced Friday could create doubt about the success of that program as well.
Versartis had $143 million in cash and equivalents as of June 30, a sum the company estimates will be enough to sustain operations for at least 12 months. Last quarter, Versartis recorded a net loss of about $37 million and used roughly $57 million in net cash to fund operating activities.