Neothetics decimated by submental fat failure test

The biotech had pulled off a $65M IPO on 2014, but its future now looks far from certain.

It was a short and bitter update out of San Diego’s Neothetics today after it said a phase 2 proof-of-concept study for its fat reduction therapy flopped.

Cue its shares nose-diving this morning by more than 70% premarket and was reported along with a failure from another small cap biotech, Matinas, which saw its shares tank 45%—all bringing a jolt to biotech investors who had been riding high on last week’s bump.

RELATED: Biotech bounces as the bones of Trump's plans on pricing emerge

Whitepaper

Overcoming Risk in Oncology Drug Development

Oncology drug development is full of potential obstacles and risks, and you must carefully plan each step. Download this whitepaper for tips on finding the fast track. Premier Research. Built for Biotech.

The midstage proof-of-concept test of Neothetics’ LIPO-202 was looking to reduce submental subcutaneous fat, but “did not demonstrate improvement on any efficacy measurements or separation from placebo.”

Dan Piacquadio, head of Neothetics’ Development Committee, did not mince his words: “We are disappointed in these results, which are unambiguous.”

This could prove serious for the biotech, with Kim Kamdar, Ph.D., a member of Neothetics’ board, saying in a statement: “We are determining the path forward for the company. Our primary objective is to maximize value for our shareholders, and we will be expeditious and diligent in deciding next steps. We will share our future plans shortly.”

RELATED: Biotech Neothetics pulls off a $65M IPO and promptly takes a tumble

That has the whiff of cuts, and maybe more.

Neothetics had $9.7 million in cash as of the end of the first fiscal quarter in 2017. It was down as much as 71% premarket, worth around 75 cents a share.

Suggested Articles

The FDA approved the first spinal tether to correct the most common form of scoliosis—a ropelike implant that pulls the vertebrae into shape.

Agilent launched a new analyzer for research that observes cell behavior in real time while also collecting biosensor information.

The public financing will enable Monopar to start a phase 3 trial of a prophylactic treatment for a side effect of chemoradiotherapy.