PTC stock plummeted Wednesday and gave its closest rival a boost after the company's treatment for a neurological disorder flunked in a Phase 3 study.
But the biotech company sees a silver lining. Though its treatment didn't meet the primary goal in patients with Friedreich's ataxia — a genetic disease that affects the nerves and leads to difficulty walking and slowed speech — it did lead to "significant benefit" on secondary measures of the test.
PTC Therapeutics said it's still planning to discuss with regulators a path to approval for the drug called vatiquinone.
SVB Securities analyst Joseph Schwartz says PTC is well behind Reata Pharmaceuticals. In February, Reata gained approval for Skyclarys, the first Friedreich's ataxia drug, in patients age 16 and older. The drug isn't commercially available yet due to manufacturing issues. It had looked like PTC was closing the narrow lead Reata had with Skyclarys.
"However, on the heels of the disappointing (study) data, we think the prospect of a vatiquinone launch in 2024 has become more unclear, which could be a net-positive for Skyclarys, as the therapy has the potential to hold its lead for longer than anticipated," Schwartz said in a note to clients.
On today's stock market, though, PTC stock plummeted 19.6%, ending the regular session at 46.95. Shares closed in line with their 50-day moving average, according to MarketSmith.com. Reata shares, on the other hand, surged 20.4%, closing at 95.36.
PTC Stock: A Barrage Of Bad News
The Friedreich's ataxia news was just one piece within a barrage of bad news.
PTC also said it will realign its portfolio in an effort to curb expenses. It scrapped gene therapies for Friedreich's ataxia and Angelman syndrome. Angelman is a nervous system disorder that includes delayed development, intellectual disability, speech impairment and balance issues.
The company expects its expenses in 2023 to drop by 15% for the remainder of the year.
Further, PTC says it "relieved" Chief Financial Officer Emily Hill of her responsibilities. Hill is leaving the organization, the company said in a news release.
"Overall, this could foretell a more focused PTC (in terms of both intellectual and financial capital) under its second CEO, but the [Friedreich's ataxia] failure on the heels of the Skyclarys approval in the face of a low bar and potential implications for [an epilepsy study] are likely to weigh on shares near term," Credit Suisse analyst Judah Frommer said in his note to clients.
He has a neutral rating and 50 price target on PTC stock.
Improvements On Secondary Measures
SVB's Schwartz lowered his expectations for PTC to succeed with vatiquinone in Friedreich's ataxia to 25%, down from 50%.
The biotech company tested its drug in 146 children and adults with Friedreich's ataxia. It hoped vatiquinone would make a difference on a physical exam measuring disease progression. But at 72 weeks, the drug missed its mark vs. a placebo.
However, PTC pointed to a "significant" benefit on two scales of stability tied to morbidity and how quickly patients lose the ability to walk. Further, there was also a significant improvement on a scale measuring fatigue.
One scale showed a 75% slowing in disease progression over 72 weeks, PTC said.
PTC stock remains highly rated with an IBD Digital Relative Strength Rating of 96, which puts shares in the top 4% of all stocks when it comes to 12-month performance.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
