What happened

Shares of Omeros Corporation (OMER -4.98%), a biopharmaceutical company, fell 37.4% in October, according to data from S&P Global Market Intelligence. A disappointing first look at comparison data for its rare-disease candidate was to blame.

So what 

Omeros Corporation has shown us plenty of inspiring anecdotes that suggest OMS721 is a first-in-class immune-system inhibitor that can make a real difference for patients with a variety of rare blood disorders, and generate blockbuster sales in the process. On Oct. 1, Omeros showed us results from the drug's first placebo-controlled study, and they suggest its candidate isn't going anywhere.

A man wearing a suit and holding a briefcase lies face down on a concrete surface, as if knocked down, while four other people in suits look down at him.

Image source: Getty Images.

Patients with IgA nephropathy have high levels of protein in their urine, a symptom that OMS721 should reduce if it's truly effective. Among nine evaluable patients, median proteinuria reductions were 18.4% in the group given OMS721, compared with 18% in the placebo group.

Now what

We should probably wait for comparison data from more than nine patients before we close the door on OMS721, but the lack of a significant difference is startling. Earlier this year, the company began a 430-patient pivotal study that uses proteinuria reduction versus a placebo as the primary endpoint.

Given OMS721's awful showing in its first placebo-controlled study with similar patients, it appears the company could end up throwing a lot of money at the program and end up with nothing to show for it when top-line results read out in 2020. On the other hand, the company has regained temporary pass-through status for its only commercial product, Omidria. Once that clock runs out, though, Omeros Corporation could take another turn for the worse. That makes its stock one best avoided unless the OMS721 program can redeem itself down the road.