What happened
More bad news for Cortexyme (CRTX +2.98%) shareholders -- with its stock already down more than 90% from August's peak, as of 1:11 p.m. ET Wednesday, the stock's lost 30.1% of yesterday's closing price. Today's setback is in response to the company's announcement that the U.S. Food and Drug Administration has placed a full clinical hold on trials of its Alzheimer's disease treatment COR388, also called atuzaginstat. At one point, atuzaginstat could have been considered Cortexyme's flagship project.
So what
In retrospect, it can't be terribly surprising. Shares of Cortexyme soared early this year in anticipation of reports that atuzaginstat would perform as the company described. In October, however, an update on the company's phase 2/3 trials of the treatment indicated the drug failed to achieve statistically significant results. That report alone shaved three-fourths of the stock's value in a single day and has continued to chip away at Cortexyme's value in the meantime.
Image source: Getty Images.
The typical next step in the drug approval process would be a denial of that approval request by the FDA, or the pharmaceutical developer's reconsideration of the trial's data that would make the treatment approvable in a different way. That's not the next step that's taken shape here, however. Rather, the FDA has officially asked Cortexyme to suspend all dosing of the drug in question, as well as suspend the enrollment of new patients in the clinical trial of atuzaginstat as a therapy for Alzheimer's.
Although Cortexyme did not disclose the FDA's specific concern, full clinical holds usually suggest a safety issue. But, they can also indicate incomplete information within the investigational new drug (IND) application.
Now what
As expected, Cortexyme sought to assure investors regarding today's announcement, noting that it "plans to explore strategic alternatives for its coronavirus program and non-Alzheimer's indications for COR388." The company also reminded the market that it's got another treatment, COR588, in the works as a therapy for Alzheimer's disease. Investors weren't impressed, though, with the company itself noting that it is seeking to cull costs. It's a not entirely subtle hint that Cortexyme is on the defensive.
Given its recent history and now the stock's sheer volatility -- mostly bearish -- Cortexyme seems like a name to avoid for the foreseeable future.
