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Why Frequency Therapeutics Stock Is Crashing Today

By Keith Speights - Mar 23, 2021 at 12:12PM

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The company announced disappointing results from a phase 2a study.

What happened

Shares of Frequency Therapeutics (FREQ 0.00%) were crashing 74.9% as of 11:07 a.m. EDT on Tuesday. The huge drop came after the company announced disappointing top-line interim results from a phase 2a clinical study evaluating experimental therapy FX-322 in treating sensorineural hearing loss (SNHL). SNHL is the most common form of hearing loss and usually results from damage to auditory sensory hair cells in the inner ear.

So what

Clinical-stage biotech stocks fall hard on bad news from clinical studies. And they fall really hard when that news is from a company's only pipeline candidate. That's the case for Frequency Therapeutics.

Frequency reported that participants with SNHL receiving four weekly injections of FX-322 didn't show any improvement in hearing loss compared to participants receiving placebo. However, the company noted that the placebo group had an unexpectedly high improvement in hearing that didn't occur in any previous studies of FX-322. This benefit was also higher than established standards that have been published.

Woman with a special headphone on for testing hearing with a healthcare professional standing next to her

Image source: Getty Images.

It's possible that there were flaws in Frequency's clinical trial design. If so, today's news might not be as bad as it seems.

Now what

Frequency isn't giving up on FX-322 at all. The company also announced preliminary results from an open-label study of the experimental therapy as a single dose. Although this study focused on tolerability, participants receiving FX-322 demonstrated what Frequency referred to as "clinically meaningful and statistically significant" improvement in word recognition scores.

The company now plans to shift its focus to evaluating its experimental therapy as a single-dose regimen. CEO David Lucchino also said Frequency could "evaluate retreatment at longer intervals."

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