Vital Therapies' shares crash on news of a PhIII failure

Vital Therapies ($VTL) has joined the growing list of biotechs crushed by a single catalyst after it reported late Friday that their cell-based therapy for liver damage had failed a late-stage study.

Vital limped into the public market a little more than a year ago after pricing its shares at $12, below the range. The stock had swelled to more than $17 a share as the Phase III data neared for the San Diego-based biotech, then went into meltdown mode after the news hit after the market closed, plunging 80% in premarket trading today.

Investors had been gambling that Vital's Elad system, which uses hepatoma-derived C3A cells to cleanse and bolster a patient's plasma before it's pumped back in, would prove a winner in restoring the livers of patients with alcohol-induced liver damage.

Overall, though, the investigators concluded that there was no difference in survival rates between the treatment group and the control arm. But, they divvied up the treatment group based on the MELD score--which ranks severity of illness based on a model for end-stage liver disease--and concluded that patients with a MELD score under 28 "approached statistical significance." That's still a fail, but the over-28 treatment group did worse than the control arm.

Vital had difficulty going public to begin with, and this latest small crash illustrates the risks that investors run when they back a small company with unproven technology. Over the past three years we've seen a wave of biotechs complete an IPO, only to stumble on a key catalyst.

A few days ago it was Macrocure ($MCUR, a regenerative med play), but earlier examples of new wave biotech disasters include the shrinking Celladon, Eleven Biotherapeutics ($EBIO, which recently revived on the launch of another Phase III shot), and the defunct Regado.

- here's the release

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