Raptor Pharma to stop developing liver drug, shares slump

[September 15, 2015]  By Rosmi Shaji

(Reuters) - Raptor Pharmaceutical Corp said it did not plan to develop its liver drug after it failed to meet the main goal in a second mid-stage study, wiping out more than a third of the company's market value.

The company's shares fell as much as 43 percent to a more than two-year low of $6.83 on Monday. At the day's low, the company's market value declined by nearly $415 million.

The drug, RP103, was being tested in children with nonalcoholic steatohepatitis (NASH), which is characterized by fat buildup in the liver, along with inflammation and damage.

NASH, which affects about 2-5 percent of Americans with a majority being children, has no available treatment and is one of the leading causes of liver-related morbidity and mortality.

The drugmaker said it plans to continue further development of RP103 in genetic disorders such as Huntington's and mitochondrial disease.

Analysts were, however, divided on the drug's success in the trials.

While Oppenheimer & Co analyst Christopher Marai said he did not expect positive data from the Huntington's trial, Cowen and Company analyst Ritu Baral said she was neutral on the drug's success in the neurological diseases studies.

Raptor is testing RP103 in a large study to treat patients with Huntington's disease and in mid-stage study for Leigh Syndrome.

The company's first approved product — kidney drug Procysbi — is used as a treatment for nephropathic cystinosis, a rare genetic disorder.

The NASH study was sponsored by a unit of the National Institutes of Health through a research agreement.

The drug met its main goal in the first mid-stage study in children with NASH in 2010.

While the earlier study measured the reduction in levels of two liver enzymes, the recent study compared the severity of the disease before and after treatment.

Patients given the drug in the second study did not experience improvement in liver function at 52 weeks, the company said.

Gilead Sciences Inc, Intercept Pharmaceuticals Inc and France's Genfit SA are among other drugmakers developing treatments for NASH.

Shares of the Novato, California-based company were down 42 percent at $7.03.

The stock was the most traded on the Nasdaq, with nearly 11.7 million shares changing hands, more than 10 times their 25-day moving average.

(Reporting by Rosmi Shaji in Bengaluru; Editing by Saumyadeb Chakrabarty and Sriraj Kalluvila)

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