What happened
Shares of Summit Therapeutics (SMMT +1.86%), a clinical-stage biopharmaceutical company, tanked Monday morning after the company reported disappointing clinical trial results for its lead candidate. With investors nervous about the drugmaker's path forward, the stock had lost 49.8% as of 11:51 a.m. ET.
So what
Summit Therapeutics' lead drug candidate is ridinilazole -- a novel antibiotic intended to treat Clostridium difficile infection (CDI). In the U.S. alone, around 500,000 cases of CDI are diagnosed annually. That's enough to run up more than $5 billion in acute care expenses.
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Ridinilazole is supposed to attack C. difficile specifically while leaving the rest of the microbiome intact. But the biotech stock crashed Monday because, in a pair of identical phase 3 trials, ridinilazole did not show itself to be significantly superior to the standard of care antibiotic for CDI, vancomycin.
Investigators were looking for a significantly higher rate of response to treatment plus less recurrence after those responses. Patients who responded to ridinilazole were less likely to experience a recurrence if they responded. Unfortunately, it looks like patients weren't any more likely to respond to treatment with ridinilazole.
Now what
Summit Therapeutics didn't share the response rates observed in its phase 3 study yet, but full results from it will be presented at upcoming medical conferences.
Summit Therapeutics doesn't have any other new drug candidates in clinical-stage trials, so it probably won't throw in the towel on ridinilazole. That means current shareholders can expect a dilutive secondary stock offering in 2022. As of the end of September, the company had $80.2 million in cash on the books after burning through $61.5 million in the first nine months of 2021.
