Bellus Health Plummets After Protein-Fighting Drug Fails Testby
Shares drop the most since company began trading in 2000
Company still has C$9 million in cash, company executive says
Bellus Health Inc. plunged 85 percent, the most since it began trading in 2000, after the company said its drug used to fight a deadly protein buildup failed Phase 3 tests.
Bellus closed down C$2.05 to 37 Canadian cents for a market value of C$20.2 million ($15.8 million) in Toronto.
Bellus’s drug KIACTA was being developed to treat AA amyloidosis, a rare condition that progresses from chronic inflammatory diseases such as rheumatoid arthritis. The disease causes the amyloid A protein to build up in major organs, particularly the kidneys, which can lead to death.
“The first thing to say is that we didn’t meet the primary efficacy of the test, which is a pretty big deal,” Francois Desjardins, vice president of finance at the Laval, Quebec-based company, said by phone. “It is a key test for the drug.”
The drug passed earlier tests after it was shown that it significantly delayed the disease, and was safe over long treatment periods, according to the statement.
The drug is set to undergo more analysis over the next few weeks, Desjardins said. Attempts to salvage the drug and next steps for the company will become clearer after that, he said. The results will be presented in early July at the International Symposium on Amyloidosis in Sweden.
The company is still working on a number of other projects including a drug for sarcoidosis, a rare kidney syndrome, currently entering Phase 2 trials, as well as an amyloidosis research project, Desjardins said. It is also preparing Phase 2 trials for its Shigamab drug, designed to combat a life-threatening complication of the E. coli bacteria known as Hemolytic Uremic Syndrome that can lead to kidney disease.
The company has about C$9 million in cash with a “low burn rate” which should last over the next couple of years, Desjardins said.
“While there is still potential to find value in KIACTA, we now believe that is a highly unlikely scenario,” David Novak, an analyst at Cormark Securities Inc., said in a note. He has a target price of 40 Canadian cents on the stock.