Verve Therapeutics (VERV 1.62%) saw its shares crater by 36% on April 2 when it reported that a serious mishap had occurred in one of its clinical trials. Understandably, investors may now question whether the gene-editing biotech has a shot at recovering, or if it's doomed. Let's consider what happened in a bit more depth while doing our best to remain impartial regarding the stock's movement.
This big red flag can't be ignored
Verve's lead program -- called VERVE-101 -- is a gene-editing therapy that's intended to permanently treat or potentially even cure heterozygous familial hypercholesterolemia (HeFH), a hereditary disease that causes dangerously and chronically high levels of LDL-C cholesterol. In the long run, if it is shown to safely work for HeFH, VERVE-101 could be used to treat a wider population of people with atherosclerotic cardiovascular disease (ASCVD), which affects tens of millions of people in the U.S. and beyond.
But, as you may have guessed, things are not going as planned. Per the company's data update, in VERVE-101's phase 1b clinical trial with 13 patients, one patient experienced a serious adverse event (SAE), also known as a potentially life-threatening side effect. Though the patient did not experience any symptoms, blood tests indicated that their levels of certain heart-health related biomarkers were dangerously high. Thankfully, the patient has already recovered.
Management has decided to halt further enrollment in the phase 1b trial, and refocus the company's efforts on VERVE-102, another candidate that uses a different drug delivery mechanism than VERVE-101 but is otherwise very similar. That's key since Verve's leaders seem to think the problem was caused by the lipid nanoparticle (LNP) system used in VERVE-101, which isn't used in the other program.
The new LNP that's used with VERVE-102 has reportedly already been tested in clinical trials by other businesses, so its safety characteristics are more understood. The phase 1b clinical trial for VERVE-102 should start in the U.K. and Canada in the second quarter of this year.
So it looks like Verve's lead program is down for the count. Its timeline to potentially commercializing its first medicine is now further away than before, and it is almost certain that some of its resources have been irrevocably spent without much hope of getting a return in the future. The company is in discussions with regulators regarding VERVE-101's future, and so far they haven't mandated any ongoing trials to halt.
It could have been a lot worse
As grim as the above may sound, the reality of the situation is that Verve's setback with VERVE-101 is a bump in a road that's known to be quite bumpy.
Biotechs are just getting started when it comes to therapies intended to edit the genes of living people to cure their hereditary illnesses. Failures in clinical trials are to be expected. And while it's preferable to avoid safety incidents, checking for safety indicators is exactly what phase 1 clinical trials are intended to do. The fact that the patient was asymptomatic and has since recovered very much mitigates what could have been a disaster otherwise.
Furthermore, there is actually a piece of decent, if preliminary news. In one cohort in the study containing six patients, including the one that experienced the serious adverse event, patients experienced an average of a 46% reduction in their level of LDL-C cholesterol. And in the two patients who were dosed the earliest, their LDL-C levels remained reduced for at least 270 days. Such findings bode well for VERVE-102's efficacy although they'll need to be confirmed.
In other words, Verve's medicine appears to be working for its intended purpose. It also has $624 million in cash, equivalents, and short-term securities as of Q4 of 2023. Management is confident that the sum will hold it over until toward the end of 2026, and with trailing-12-month research and development expenses of $184.9 million, there is no reason to doubt that at present.
This setback won't sink the company. In fact, it's actually a buying opportunity, assuming you're risk tolerant enough to invest in a pre-revenue biotech stock. It's entirely possible that VERVE-102 will falter, too, of course -- but if it succeeds, investors who held through the turbulence will probably be rewarded handsomely.
