Disc Medicine's light sensitivity treatment succeeded in a midstage study Monday, but an outsize placebo response confounded the results and the biotech stock plummeted.
The biotech company is trying to treat erythropoietic protoporphyria, a rare condition in which a toxic metabolite called protoporphyrin IX builds up in the blood. Patients experience severe reactions to sunlight, including pain, swelling, burning sensations, blistering and disfigurement.
After 17 weeks, patients who received Disc's drug, bitopertin, had statistically significant reductions in protoporphyrin IX.
But the secondary goal of the study — time spent in the sunlight without pain — wasn't statistically significant due to a "greater than expected" response from the placebo group, Disc said in a news release. On average, low-dose and high-dose patients spent 175.1 hours and 153.1 hours in the sunlight without pain, respectively. Placebo patients reached 133.9 hours.
On today's stock market, Disc stock crashed 45.1% to close at 34.21. The biotech stock has fallen over the last month and definitively undercut its 50-day moving average on March 21, according to MarketSurge.com.
Biotech Stock Faces Price-Target Cut
There's only one approved treatment for patients with erythropoietic protoporphyria. That treatment, dubbed Scenesse, is a synthetic hormone implanted under the skin to help stimulate melanin production. Melanin is a substance in the body that produces hair, eye and skin pigmentation.
Analysts noted Scenesse gained approval based on its ability to lengthen the amount of time patients could spend in the sunlight without experiencing pain. So the results from Disc's study are a "significant concern," Wedbush analyst David Nierengarten said in a report.
He slashed his price target on the biotech stock to 43 from 84, but kept his outperform rating.
Wedbush analyst David Nierengarten slashed his price target on Disc stock to 43 from 84, but reiterated his outperform rating.
"It is potentially the registration-enabling (goal) for Phase 3 studies," he said. "We are taking down our valuation of the program due to the heightened risk around a Phase 3, in addition to additional estimated time to approval."
Threefold Improvement Over Scenesse
The results are particularly surprising considering that an earlier study, called Beacon, showed patients who received Disc's bitopertin had an average 222.6 hours of pain-free time spent in the sunlight over six months. That was a threefold improvement relative to Scenesse treatment, Leerink Partners analyst Thomas Smith said in a client note.
"Based on these results, we believe that investors were looking for a twofold improvement for bitopertin over the placebo group in (the study called) Aurora," he said.
Smith reiterated his outperform rating on the biotech stock.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
