Vitae tanks after cutting its psoriasis trial short, stoking safety concerns

Vitae Pharmaceuticals ($VTAE) saw its share value plummet  after the company revealed that it enrolled fewer patients than expected in a trial for its oral psoriasis drug, spurring market chatter that the treatment might have a safety problem.

The Fort Washington, PA, company is working through a two-part trial on VTP-43742, a tablet meant to clear up autoimmune disorders including psoriasis. In the first part, Vitae dosed 40 healthy volunteers and, without getting into details, declared VTP-43742 to be safe and generally well tolerated. In part two, which began in September, Vitae had planned to recruit 60 patients with psoriasis in hopes of establishing proof of concept.

But Vitae ended up enrolling only 34 psoriatic patients in the second stage of the study, the company disclosed Thursday, declining to elaborate on why. Management "believes that the totality of the data from the 34 psoriatic patients, including clinical efficacy and accelerated biomarker data, will be sufficient to determine next steps in the program," Vitae said in a statement, adding that it is currently poring over the results with plans to announce top-line efficacy data by the end of the month.

The news sent shares down more than 40% on Friday morning as investors worried that a safety snag may have hamstrung Vitae's trial enrollment. Stifel downgraded its rating of Vitae to hold, with analyst Thomas Schrader writing in a note to clients that "it's hard to imagine a scenario where truncating a cohort at four patients is good news, and it seems like the company may have encountered some type of (toxicity) issues."

On a conference call with analysts, Vitae declined to delve into its decision to cap enrollment early, and the company isn't commenting further until the top-line data are ready.

Vitae believes VTP-43742 has the chance to become a disruptive force in the world of autoimmune treatments. A new class of injected therapies, led by Novartis' ($NVS) Cosentyx, has posted stellar efficacy in clearing up psoriasis and psoriatic arthritis by blocking the activity of an inflammatory protein called interleukin-17. Vitae's oral candidate targets an upstream protein called RORγt to interrupt the secretion of IL-17 in the first place, and the company hopes it can develop an easier-to-use alternative to regular injections.

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