It is awfully hard to develop a drug that gets rid of fat. The latest biotech to feel the R&D pain in the space is Neothetics, Inc. (NASDAQ:NEOT), with investors taking a beating in Monday morning trading following top-line results from a phase 2 proof-of-concept study of LIPO-202 for reducing submental subcutaneous fat.
Submental fat refers to the fat on top of muscle that can be easily grabbed and felt.
LIPO-202 is a proprietary, first-in-class injectable formulation of the well-known long-acting ß2-adrenergic receptor agonist, salmeterol xinafoate. Salmeterol xinafoate is the active ingredient in the FDA-approved inhaled products such as SEREVENT DISKUS®, ADVAIR HFA® and ADVAIR DISKUS®.
The San Diego-based company said that LIPO-202 didn't provide an improvement over placebo in reducing the target fat in the 162-patient study. While the trial further validated the strong safety profile of LIPO-202, that lack of efficacy sent share of the company into a tailspin.
Previous research indicated that LIPO-202 told the body to metabolize stored triglycerides, or fat, resulting in smaller fat cells without hurting any healthy tissue.
A real problem for investors is the fact that LIPO-202 is the only drug in the pipeline at Neothetics. The company's leadership is discussing the path forward and promises to disclose future plans shortly.
After successfully coming public in 2014 via an initial public offering that raised $65 million, Neothetics ended the first quarter with $9.7 million.
Late in 2015, shares were around $11 each. After a nosedive just ahead of the start of 2016 on bad clinical data, shares had clawed their way back to as high as $2.63, which was touched last month.
With the morning news - and possibly the future of the company in question - shares have plunged 71% to 68 cents in early afternoon trading.
