Shares of pharmaceutical company Dermira were in freefall Monday after the company’s experimental acne drug failed two key late-stage clinical trials.
The company was hoping its topical gel, called DRM01, would alleviate acne in patients ages nine and up. But stage three tests showed it to be on par or just slightly better than the study’s control group. Investors punished the company, whose stock was down 63% as of 10:30 a.m. ET Monday.
“We are surprised and extremely disappointed by the results of the phase three program,” said Tom Wiggans, chairman and chief executive officer of Dermira. “This is disappointing not only for the company, but also for patients who are living with this condition and dermatologists who have been looking for novel therapies to treat them.”
The plunge in the stock lowered the company’s market cap from roughly $1 billion to $388 million. Dermira says it has halted development on the acne drug in lieu of the results.
The company will now focus on another drug in testing called DRM04, which treats hyperhidrosis, also known as excessive sweating.
Acne, which affects up to 50 million Americans, is proving to be a hurdle for drug manufacturers. Last year, pharmaceutical companies Novan and Foamix Pharmaceuticals reported negative phase three trial results for their own acne treatments.
