(Reuters) – Shares of drug developer ResTORbio Inc plunged more than 80% to a record low on Friday after a late-stage trial failure prompted the company to abandon testing its lead drug as a treatment for respiratory illness.
The company, however, said it continues to test the drug, RTB101, in other conditions, including Parkinson’s disease.
On a conference call with analysts, ResTORbio executives expressed confidence in the ongoing Parkinson’s trial, data from which is expected in mid-2020, saying it was unlikely to face a similar fate.
“In the Parkinson’s disease trial, the mechanism of action will be completely different than what we were aiming for (in the respiratory illness trial),” Chief Medical Officer Joan Mannick said, adding the doses tested in the two trials were very different.
Shares of ResTORbio were trading down 82.3% at $1.40 and have fallen nearly 8% this year.
“Beyond today’s trading, investors are unlikely to give the company much credit for its further development efforts in this or any other indication,” SVB Leerink analyst Geoffrey Porges said.
“The timelines for value realization in such indications are likely to be long and the cash requirements substantial.”
The respiratory tract illness trial tested RTB101 in people over 65 during the winter flu season and sought to prevent the illness from developing.
The trial failure dampens the company’s hopes of tapping a large potential commercial opportunity in the prevention of respiratory tract infections in seniors.
When asked about the company’s restructuring plans after the failure of the trial, ResTORbio’s Chief Executive Officer Chen Schor said the company was “well funded” for its upcoming trials, but added it may need to make “some minor modifications”.
As of Sept. 30, the company had $117.3 million in cash, cash equivalents and marketable securities.
(The story corrects advisory to remove extraneous words)
Reporting by Dania Nadeem in Bengaluru; Editing by Shinjini Ganguli