What happened

You win some and you lose some.

Unless you're Cyclerion Therapeutics (NASDAQ:CYCN) -- then you lose twice.

Shares of the biotech are down 79% at 12:37 p.m. EDT today after announcing a pair of clinical trial failures for praliciguat, which stimulates a protein involved in the widening of blood vessels.

Man feeling frustrated looking at stock charts

Image source: Getty Images.

So what

In a phase 2 clinical trial testing praliciguat in patients with diabetic nephropathy, a disease where diabetes causes loss of kidney function, praliciguat wasn't able to reduce albuminuria, a marker for kidney function, compared with placebo. There was a trend in the right direction for patients taking praliciguat, but the Food and Drug Administration really wants to see statistical significance, not just trends.

While analyzing the data, Cyclerion noticed that patients at one of the clinical trial sites had undetectable or very low concentrations of praliciguat in their plasma. When these patients were excluded from the analysis, the treatment effect increased and variability was reduced. But, again, it's not like the FDA would accept this type of post-hoc analysis as a basis for approval, so investors should take it with a grain of salt.

In a second phase 2 study, praliciguat also couldn't help patients with a specific type of heart failure. Cyclerion was expecting the drug would improve exercise capacity as measured by cardiopulmonary exercise testing, but the company didn't even see a trend in improving heart failure symptoms. Diabetics in the study saw a reduction in their HbA1c levels, a measure of long-term blood sugar levels, which Cyclerion took as a good sign when combined with the aforementioned positive trend in patients with diabetic nephropathy.

Now what

Cyclerion has decided to stop development of praliciguat in patients with heart failure, but plans to out-license the drug for late-stage development as a treatment for diabetes. Praliciguat might work, but investors shouldn't hold out hope that Cyclerion will be able to find a large pharmaceutical company willing to take a shot based on the data to date.

At this point, Cyclerion's best chance for turning things around is with olinciguat, a drug in the same class as praliciguat that it is testing in patients with sickle cell disease. Cyclerion only has enough cash to last through the first quarter of 2021, but fortunately data from a phase 2 study is expected in the middle of next year, which could provide an opportunity to raise additional capital at a higher valuation.