Shares of drug developer Acelyrin (SLRN.O) on Tuesday erased all gains made since their stellar market debut in May, as the company’s experimental lead drug failed to show superiority to placebo in reducing symptoms of an inflammatory skin disease.
Acelyrin was one of the few biotech companies to go public this year, raising $540 million in its debut, the second biggest initial public offering (IPO) in the sector after Kenvue (KVUE.N).
On Tuesday, shares of Acelyrin slumped 61.7% to $10.90. They had risen 18.7% since the IPO.
Acelyrin’s izokibep failed the main goal of a mid-to-late stage trial to show statistically significant reduction in abscesses and inflammatory nodules compared to placebo in patients with Hidradenitis Suppurativa (HS), the company said.
HS is a chronic inflammatory skin condition that causes painful lumps under the skin.
Acelyrin said the trial was hit by early discontinuations as well as better placebo efficacy rates.
Analysts at Piper Sandler said they did not expect similar dropouts in other trials of the drug, including one testing it in patients with psoriatic arthritis.
However, Jefferies analyst Akash Tewari slashed the price target on Acelyrin’s stock to $15 from $31, calling the latest data “painfully disappointing.”
“It’s difficult to glean much from the data given how poorly the trial was run. We’ll also need more clarity on the regulatory path forward,” he said.
As of last close, Acelyrin’s stock was trading at 3.39 times the company’s book value, or the value of its assets versus liabilities, according to LSEG data, compared with 6.10 times for rival Ventyx Biosciences (VTYX.O) and 9.64 times for Apogee Therapeutics (APGE.O).