What happened
Athira Pharma's (ATHA -4.48%) stock crumbled by more than 69.5% as of 10:04 a.m. ET Wednesday after the company reported that results from a phase 2 clinical trial for its drug treating mild to moderate Alzheimer's disease didn't reach statistical significance. The company said that its medicine, called fosgonimeton, was less effective than expected in the context of the study because it was co-administered with another drug that potentially interfered with it.
So what
The phase 2 failure bodes poorly for Athira's future, as it still has an ongoing phase 3 trial for fosgonimeton in Alzheimer's disease that's due to finish enrollment by the end of the third quarter.
Beyond that, it only has two other clinical-stage programs, so another stumble with fosgonimeton could spell the end of a large portion of its pipeline. But, the phase 2 trial was designed as a proof-of-concept study to learn more about the biological effects of the drug, so the company can still try to frame the results as a success.
Now what
Given that it has more than $263.5 million in cash and trailing-12-month operating expenses of only around $67.3 million, it won't have any trouble continuing its research and development expenditures at their present level for the foreseeable future, so this setback isn't the end of the company.
Management claims that its analysis of a subgroup of patients in the trial who received fosgonimeton but not the potentially interfering drug showed improvements in cognitive functioning on the Alzheimer's Disease Assessment Scale-Cognitive Subscale (ADAS-Cog) diagnostic questionnaire. So, it plans to use that insight to tweak the parameters of one of its other ongoing studies and increase its chance of success.
