What happened

Shares of Cortexyme (CRTX -2.39%), a clinical-stage biotechnology company, are collapsing in response to a clinical trial failure. Investors upset with the results had hammered the stock 74.9% lower as of 12:14 p.m. EDT on Wednesday.

So what 

Cortexyme's former lead candidate, atuzaginstat, is an experimental inhibitor of an enzyme secreted by Porphyromonas gingivalis. This microbe is found in the mouths of people with severe gum disease, and it's also been associated with Alzheimer's dementia.

Scientist pipetting.

Image source: Getty Images.

The stock is imploding because the results presented today mean atuzaginstat is finished as a potential treatment for Alzheimer's disease, or any other indications Cortexyme might have planned for upcoming trials. In terms of efficacy, the 643-patient trial was a failure because it missed both primary endpoints. Investigators failed to measure a significant reduction in the rate of cognitive decline as measured by the ADAS-Cog11 test and the ADCS-ADL test. 

The company tried to lighten today's fall by highlighting a potential path forward. A subgroup of people with oral P. gingivalis infections who also received the highest dose tested showed a significant cognitive benefit. 

The subgroup analysis isn't catching on today because the drug's safety profile took a dive it can't recover from. Among patients in the high-dose group, an unacceptable 15% exhibited elevated liver enzymes.

Now what

Elevated liver enzymes are bad because they could be a sign of liver damage. The FDA can and will shut down clinical development of a drug candidate when elevated liver enzymes coincide with signs of reduced liver function. Sadly, two patients who received the high dose also had elevated bilirubin levels, which suggests their livers weren't able to do their job. 

Coretexyme's management hailed today's results as a positive development. The disastrous combination of liver toxicity signals reported today, though, set its chance of approval for Alzheimer's disease or any other malady to zero. Without any other drugs in late-stage clinical trials, trying to catch this falling knife isn't a good idea.