What happened

Shares of Proteostasis Therapeutics (NASDAQ:PTI) were down 56% at 12:07 p.m. EST on Tuesday after the company released what it called "positive" data from a phase 2 clinical trial testing its triple drug combination in patients with cystic fibrosis.

Investors rightfully didn't see the results as positive enough.

So what

Proteostasis' headline is technically correct: Patients responded to the triple combination of dirocaftor, posenacaftor, and nesolicaftor. After 28 days, cystic fibrosis patients with two copies of the F508del mutation treated with the triple combination improved their percent predicted forced expiratory volume in one second (ppFEV1) -- a measure of lung function -- by 8 percentage points compared with placebo.

Unfortunately, the improvement isn't as good as the 13 to 14 percentage point improvement that Vertex Pharmaceuticals (NASDAQ:VRTX) saw with its recently approved triple combination called Trikafta.

The data for patients with one copy of the F508del mutation was murkier. Proteostasis noted that the triple combination improved sweat chloride -- a measurement of the protein that's mutated in cystic fibrosis patients -- but didn't improve ppFEV1 by a statistically significant margin versus placebo.

Doctor looking at a lung x-ray

Image source: Getty Images.

Now what

As biotech companies are apt to do in the face of lackluster results, Proteostasis is pressing on to a phase 3 program with two clinical trials expected to start next year. The More trial will test patients with two F508del mutations, while the Choices trial will test patients with rare mutations.

There could be an opportunity for Proteostasis to pick up Vertex's scraps if it can find a niche of patients who don't respond to Trikafta. Considering that Trikafta is expected to be a multibillion-dollar drug, the leftover patients could still be a substantial opportunity.

The biggest issue investors should be watching at this point is Proteostasis' cash, which stood at $77.8 million at the end of the third quarter. At this low market cap, raising additional funds would dilute current shareholders substantially.