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Here's Why resTORbio Fell Over 83% Today

By Maxx Chatsko - Nov 15, 2019 at 11:35AM

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The company's lead drug candidate flopped an important clinical trial, which has investors questioning the validity of the pipeline's approach.

What happened

Shares of resTORbio ( TORC ) fell over 83% today after the company reported that its lead drug candidate, RTB101, failed a late-stage clinical trial evaluating its potential to prevent respiratory illness in adults over 65. The company has discontinued development in that indication but will continue exploring its potential as a treatment for Parkinson's disease.

While resTORbio reminded investors that it ended September with $117 million in cash, that did little to stop a mass exodus from the company's shares. Investors adjusted the company's market valuation from over $320 million to roughly $50 million on the news. 

As of 10:49 a.m. EST, the pharma stock was down 82.8%.

An arrow on a chart represented by a paper airplane crashing through the x-axis into negative territory.

Image source: Getty Images.

So what

Today's news is just the latest reminder that biology is incredibly complex. The idea that taking a single drug and targeting a single protein in the human body can activate molecular pathways that protect humans against aging and age-related diseases is wishful thinking at best.

resTORbio has gone all-in on the mTOR hypothesis. The mTOR protein plays a role in telling the body to build new cells (when energy is abundant, such as after eating) or break down old cells and recycle their parts (when energy is low, such as during periods of fasting). There's solid evidence suggesting that fasting and calorie restriction, which also happen to reduce the expression of mTOR, are two of the absolute best ways to reduce disease risk and prolong healthy lifespan. From the hara hachi bu practice in Japanese culture to a well-controlled study, spanning more than 30 year, of calorie restriction in rhesus monkeys, the results appear to hold up.

So inhibiting mTOR with a drug makes sense, right? Not necessarily.

The problem is that mTOR, as with many proteins, has multiple roles in the human body, and the observed effects from fasting or calorie restriction rely on a biochemical cascade far more complex than can be explained by mTOR alone. This is the classic "Can a biologist fix a radio?" thought experiment in action.

Now what

Investors are right to walk away from resTORbio. The company's lead drug candidate, RTB101, is a TORC1 inhibitor. The idea of the failed phase 3 trial was to give it to adults over the age of 65 during flu season to see if they had a significantly reduced risk of developing respiratory illness. They didn't. More importantly, there's no reason to believe individuals given a TORC1 or TORC2 inhibitor alone, late in life and for a limited time, will lead to any meaningful clinical outcomes in other diseases being studied across the company's pipeline.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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