Failure of its lead antiviral drug in a Stage 3 clinical trial led to a fiscal bloodbath and a tsunami of bad publicity Monday for Durham-based Chimerix (Nasdaq: CMRX).
A darling of investors and a company once seen as developing a cure for Ebola, the firm’s stock “crater” by more than 81%, closing at $6.62 which represented a drop of nearly $29. That’s a record low for the stock.
However, in pre-market trading Tuesday, shares regained 6 percent, or 39 cents.
Some analysts quickly downgraded the stock.
The headlines were in several cases quite brutal:
- Chimerix Stock Falls Into Uncertainty – Barron’s
- Chimerix shares crater after late-stage trial fails – MarketWatch
- Why Chimerix’s Shares Collapsed Today – Motley Fool
- Chimerix downgraded by FBR – CapitalBriefing.com
- Chimerix: ‘Disastrous’ – Barrons.com
- Rocky road for Chimerix – CNBC
- Is There Any Hope for Chimerix? – 24/7 Wall St.
- Why Chimerix (CMRX) Stock Is Tanking Today – TheStreet
- Chimerix Ditched Its Ebola Treatment To Focus On Cytomegalovirus…And It Just Whiffed Phase 3 Trials – Benzinga
- Chimerix falls after study disappoints – CNBC
- The 52-Week Low Club for Monday – 24/7 Wall St.
Inevitably after such a collapse, a possible shareholder lawsuit looms.
“Levi & Korsinsky, LLP Announces an Investigation Involving Possible Securities Fraud by Chimerix, Inc. and Certain Officers and Directors,” the New York law firm announced just after the markets closed.
The company’s announcement early Monday that the failure of its drug candidate (called brincidofovir) triggered the sell-off stampede.
Shares fell 79 percent within moments of trading since the drug is the company’s best bet. Chimerix executives said they are still reviewing data and had not given up on the drug. However, late-stage trials were put on hold.
Chimerix dropped its development of a possible Ebola vaccine earlier this year as the Ebola threat faded. But in 2014, the firm received global attention and was able to raise substantial amounts of money in part due to the potential of the vaccine.
In the antiviral trial, Chimerix said that more patients who received their treatment died after receiving therapy than those on placebo. the deaths occurred in patients that had received stem cell transplants.
The oral antiviral had sown promise in earlier trials. It targets cytomegalovirus (CMV) infection, a form of herpes.
“While we are clearly disappointed in the top-line results from SUPPRESS [the clinical trial name], we remain committed to better understanding the full data set as we consider potential paths forward for brincidofovir,” said M. Michelle Berrey, CEO of Chimerix. “With a strong cash position, an experienced leadership team, and brincidofovir patent exclusivity through 2034, we continue to believe there is a viable path forward for the development of brincidofovir.”
Chimerix also said it would continue testing the drug as a potential treatment for smallpox and adenovirus, which causes respiratory infections.
How Chimerix explained the failure:
From W. Garrett Nichols, M.D., Chimerix’s Chief Medical Officer:
“The population of allogeneic stem cell transplant recipients is heterogeneous and complex; we will be evaluating the sub-groups of patients within SUPPRESS, such as T-cell depleted transplant recipients who have a lower risk of GVHD, to better understand these results and inform our next steps. We are reaching out to investigators and other experts to help us assess the complete data set to understand what may have caused the results of the SUPPRESS trial to differ substantially from those seen in the Phase 2 study. Additionally, we are in communication with the U.S. Food and Drug Administration and other regulatory bodies, and will share any updates on the brincidofovir clinical program when we can. With data currently in hand, we believe that brincidofovir may ultimately demonstrate a positive risk-benefit profile for the treatment of adenovirus and smallpox, as well as use in other populations in need of a novel compound for DNA viral infections.”
Chimerix said it will continue to review the data and report more information in February.
The firm still stands to earn well over $400 million from the federal government if it successfully develops a smallpox vaccine.