What happened

Shares of Satsuma Pharmaceuticals (NASDAQ:STSA) are plunging today, down 74.8% as of 11:17 a.m. EDT, after the company announced that investigational drug STS101 failed to meet the primary endpoints in a phase 3 study in treating migraine.

So what

Neither the 3.9 mg nor the 5.2 mg dose of the nasal powder achieved statistically significant improvement in the key symptoms of migraine at two hours after administration. Satsuma CEO John Kollins said that the company was "surprised and disappointed" by these results. 

Man wearing a suit looking at red line with arrow plunging through the floor

Image source: Getty Images.

Disappointment really doesn't begin to describe what the drugmaker's investors are feeling. Satsuma doesn't have any other pipeline candidates. 

The only sliver of good news in the late-stage results for STS101 was that it did show significant effects on improving pain and other of the most bothersome migraine symptoms by three hours after administration. The drug also was well tolerated in the study, with few adverse events and no serious adverse events reported. 

Now what

What's the plan B for Satsuma? It's too soon to know. The company stated that it's conducting further analysis of the late-stage results for STS101 and "expects to provide a more detailed update on its business plans after these analyses are completed." 

Satsuma's major clinical setback underscores the risks of investing in biotech stocks. There are simply no guarantees that even promising pipeline candidates will be successful.