Veru stock collapsed Thursday after the Food and Drug Administration's advisors voted against the company's cancer drug turned Covid treatment.
The FDA's Pulmonary-Allergy Drugs Advisory Committee voted 8-5, saying the benefits of the drug — dubbed VERU-111 or sabizabulin — don't outweigh its risks.
Veru tested its drug in hospitalized patients with moderate to severe Covid at risk of acute respiratory distress syndrome, or ARDS. In this life-threatening condition, the lung can't provide the body's vital organs with enough oxygen.
"We look forward to continuing to work with the FDA as we continue our efforts to ensure that this product is available to patients in a timely manner," Veru Chief Executive Mitchell Steiner said in a written statement.
On the stock market today, Veru stock plummeted 53.6% to 6.97. Shares closed at 15.01 on Tuesday and were halted Wednesday during the meeting.
Veru Stock: FDA Isn't Bound By Vote
It's possible Veru's small study could have been its downfall. The company studied the drug — which is also being tested in some breast and prostate cancer patients — in just 150 Covid patients before independent experts said it could stop the study due to early success. Veru had enrolled another 54 patients at that point and they were allowed to finish the study.
But in briefing documents posted this week, the FDA reviewers said Veru needed at least 300 patients to show a statistically significant result. In the small study, sabizabulin reduced morality by 20.5% at 60 days compared with 0%-6% for all other drugs.
"In the long history of drug (studies) for patients with severe respiratory failure over many decades, there has never been a drug to show such dramatic protection," Dr. Eric Swenson said in a written statement. Swenson is a professor of medicine, physiology and biophysics at the University of Washington. He is also a former chairman of the advisory committee.
The FDA isn't bound by the advisors' recommendation, but the agency does consider it. Veru stock likely will open at its lowest point since April.
Shares have a perfect Relative Strength Rating of 99, according to IBD Digital. This puts Veru stock in the top 1% of all stocks when it comes to 12-month performance.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
