New biopharma startup Cyclerion Therapeutics has stumbled out of the gate, disclosing Wednesday that one of its lead drug candidates failed in two mid-stage studies.
Cyclerion (Nasdaq: CYCN), which was spun out of Ironwood Pharmaceuticals’ (Nasdaq: IRWD) in April, said it will now cut its monthly expenses by 25 percent, including cutting 30 of its 135 employees.
The company’s shares crashed by 70 percent in pre-market trading as of 8:45 a.m., implying a loss of more than $200 million in value when the markets open.
The Cambridge-based company’s drug development plans revolve around sGC stimulators, which improve blood flow by causing blood vessels to widen. Its two lead drugs, olinciguat and praliciguat, are respectively being developed to tackle sickle cell disease, heart failure and a diabetes complication.
But in its first data readout as a new company, Cyclerion disclosed Wednesday that praliciguat failed to meet the main goal of a Phase 2 trial, the reduction of protein in patients’ urine, which is a symptom of nerve damage that can accompany diabetes. The drug also proved ineffective as a heart failure treatment in a separate clinical trial.
Cyclerion’s stock fell 79 percent as of 9:45 a.m. Wednesday, slashing nearly $300 million off the company’s market cap.
The company had anticipated out-licensing praliciguat after wrapping up the Phase 2 clinical trial this year. That’s still the plan, according to a company press release.
CEO Peter Hecht previously cited the strength of the sGC stimulator science as the reason for spinning out Cyclerion from Ironwood, which he co-founded and led as chief executive for two decades.
As the company noted in paperwork filed the SEC, focusing solely on sGC stimulators rather than multiple, more proven technologies, increases the risks for the startup.
Since its April split from Ironwood, the company has brought on two experts in sGC stimulators: Andreas Busch, who left Takeda Pharmaceutical Co. Ltd. (NYSE: TAK) to become Cyclerion’s chief innovation officer, and former Merck & Co. (NYSE: MRK) research head Michael Mendelsohn, who now sits on Cyclerion’s board of directors.
Outside of praliciguat, Cyclerion is currently running two other clinical trials. It anticipates releasing data from one of those tests later this year.
The company says it has enough funding to last it into early 2021, with around $125 million in the bank at the close of the third quarter.
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