What happened

Shares of Dicerna Pharmaceuticals (DRNA), a clinical-stage biopharmaceutical company, are tanking after a phase 2 clinical trial readout with the company's lead candidate, nedosiran. Investors left wondering about the company's next move pushed the stock 27.4% lower as of 2:22 p.m. EDT on Friday.

So what 

Dicerna Pharmaceuticals is developing nedosiran as a treatment for primary hypoxia (PH) types 1 and 2. Patients with this rare disorder produce too much oxalate that forms lots of painful kidney stones.

Investment advisor explaining a sinking stock chart.

Image source: Getty Images.

Last November, the FDA approved Oxlumo, a drug from Alnylam (ALNY 0.21%) that interferes with the production of an enzyme specific to PH1 patients. This is why investors hoped Dicerna's candidate would show efficacy for the still underserved PH2 population. 

The stock is getting beaten down today because the phase 2 trial results showed encouraging oxalate knockdowns for PH1 patients but not for the PH2 group. Among five PH2 patients, treatment with nedosiran led to a slight increase in urinary oxalate levels. One PH2 patient who received a placebo actually showed an improvement of more than 40%. 

Now what

With such a small number of PH2 patients evaluated so far, there's still a slight chance that nedosiran has a chance at treating this underserved population. Given the data we've seen from the first six, though, it seems Dicerna won't be able to file for accelerated approval of nedosiran as a PH2 treatment this year.

Dicerna Pharmaceuticals is also testing nedosiran as a potential treatment for PH3 patients with results expected in October. There are only an estimated 2,700 Americans with PH1. If PH3 data doesn't save the day, Dicerna could contend with Alnylam and Oxlumo for this extremely limited patient population.