Minerva Neurosciences (NASDAQ:NERV), a small-cap biotech, is rebounding a bit Monday after a dramatic plunge on Friday. Specifically, the drugmaker's shares are up by 16.4% as of 12:47 p.m. EDT.
Minerva's shares cratered by 72.5% on Friday in response to the late-stage failure of its lead drug candidate, roluperidone, as a treatment for symptoms associated with schizophrenia. The drug did no better than a placebo on either the study's primary endpoint of reduction in negative symptoms or a key secondary endpoint (improvement in personal and social performance measurements).
That being said, Minerva's brain trust did not immediately throw in the towel on roluperidone. Instead, management argued that the drug missed its primary endpoint due to a larger-than-expected placebo effect at the week 12 benchmark. Under that theory, roluperidone may still merit further study.
Minerva's plans for roluperidone's clinical development will likely hinge on the outcome of upcoming discussions with the Food and Drug Administration. The good news is that it's certainly not out of the realm of possibility that the FDA might recommend another trial, perhaps with a modestly different design.
It is certainly not without precedent for a psych med to grab a regulatory approval after a poor showing in one of its first pivotal trials. Nonetheless, it's still probably best to watch this risky biotech stock from the safety of the sidelines for the time being.