Evelo Biosciences' shares have tumbled 46% in premarket trading after the biotech firm revealed disappointing results in a phase II psoriasis trial for its next-generation drug, EDP2939.
A resounding miss, the treatment failed to outperform the placebo, which has no therapeutic effect.
Evelo will now explore strategic alternatives for its future.
In the trial, only 19.6% of patients treated with EDP2939 experienced a 50% or greater reduction in symptoms, compared with 25% who received the placebo.
The setback is the latest in a series of challenges for Evelo, which had previously seen the failure of its lead candidate for treating eczema.
The company is now considering various options, including potential partnerships focused on its existing assets.
However, Evelo's financial position doesn't leave a lot of room for maneuver with $7.6 million in cash and $43.9 million in debt as of June.
Ahead of the bell, the shares were changing hands for $1.57, down $1.34.