Four years ago, when Derma Sciences ($DSCI) reported out positive Phase II data for its diabetic foot wound healing remedy DSC127 (aclerastide), CEO Edward Quilty called the results "transformational" and excitedly predicted big things ahead for the Phase III study. This morning, though, the company was forced to concede that the Phase III was a flop and hinted at some restructuring ahead.
Derma's shares swiftly dropped 33% in premarket trading.
The decision to scrap the ongoing Phase III of the lead development product came after the data-monitoring committee recommended against enrolling any new patients in the study, saying there was no sign that the trial could conclude successfully. The study had enrolled 616 patients with diabetic foot wounds at the end of the third quarter.
"We have stopped further enrollment and initiated an orderly termination of the aclerastide trials and program, which we believe will be substantially complete by year end," Quilty said in a statement. "We are also halting all development work with DSC127 in scar reduction and radiation dermatitis."
With a thin $144 million market cap and $62 million in cash and investments, the Phase III failure will hit Derma hard.
In its statement this morning, Princeton, NJ-based Derma said it was committed to "positive operating cash flow in 2016, including assessing all aspects of the Company's operations and infrastructure that could enhance shareholder value." Traditionally, that signals the likelihood for deep cuts ahead.
- here's the release