Tetraphase in meltdown as lead antibiotic fails PhIII

Shares of Tetraphase Pharmaceuticals ($TTPH) just got blasted in the wake of a failed Phase III study of its lead antibiotic.

The Watertown, MA-based biotech announced this afternoon that its pivotal trial for countering a urinary tract infection flopped, and investors responded by slashing the value of its shares by a whopping 80%.

Tetraphase had built up expectations with the news last fall of a positive outcome for a Phase III study targeting complicated intra-abdominal infections. But with the negative outcome in this study, it has to explain how Tetraphase, which went public in 2013, can distinguish itself in a market that has attracted the return of giants like Merck ($MRK) and Roche ($RHHBY).

Tetraphase CEO Guy Macdonald

"We continue to believe that eravacycline can benefit patients with serious infections," noted CEO Guy Macdonald, "particularly those caused by difficult-to-treat Gram-negative bacteria." The CEO went on to note that the company would continue to analyze the outcome and follow up with a talk at the FDA.

The Tetraphase smash-up came on the heels of a meltdown at Flexion ($FLXN), another small public biotech that had built up hopes for its pipeline only to let down investors as it neared the finish line. Tetraphase was named a Fierce 15 company in 2010.

A few days ago, Macdonald sold 10,000 shares of Tetraphase at $41.75. Tuesday night, after the fallout, the stock was trading at $9.79.

- here's the release

Special Report: Tetraphase Pharmaceuticals - 2010 Fierce 15