Nivalis Therapeutics (NASDAQ:NVLS)

On Monday Nivalis Therapeutics stock fell by more than 52% after the company announced that it had failed its phase 2 trial in patients with Cystic Fibrosis -- CF. As soon as the results were released the stock tumbled as investors sold their shares to the open market. The phase 2 trial used the company's drug known as cavosonstat to treat these patients with CF that had the F508del-CFTR mutation. The trial tested the safety and efficacy of two doses of cavosonstat of 200 mg and 400 mg. One thing to note is that these patients that were given the NVLS drug had already been taking treatment with Orkambi.

Trial Bust

Patients were already on Orkambi, because that is what is being used as the current therapy for these patients. Orkambi was approved by the FDA back in July of 2015. It was developed by a pharmaceutical company by the name of Vertex Pharmaceuticals. The hope was that the NVLS drug cavosonstat would be able to achieve the primary endpoint of the study in order to improve clinical outcome. The problem is that the trial failed on the primary endpoint of the study. The primary endpoint was to determine if the drug could change the FEV1 measurement from baseline compared to the placebo compound. Not even the secondary endpoint of reducing sweath chloride at week 12 was successful. Unfortunately, the trial didn't achieve any endpoint. The CEO of the company Jon Congleton had this to say about the results:

“While we are disappointed in the outcome of this trial, we plan to continue to investigate the therapeutic potential of cavosonstat and our S-nitrosoglutathione reductase (GSNOR) inhibitor portfolio to  determine  next steps”

Competition Wins

There is no denying that the phase 2 trial was being watched closely by NVLS management and investors. There was, however, another key player that was really watching to see how the trial went. That key player being Vertex Pharmaceuticals, which is the one that produced Orkambi as standard of care treatment for CF patients. The reason why Vertex was looking at this trial was to see if cavosonstat would steal its thunder. In other words, if cavosonstat was positive and made it to market it could compete toe to toe with Orkambi. That's not the case anymore and now Vertex Pharmaceuticals can breathe a sigh of relief. This means that Vertex still maintains its position as the leader in the Cystic Fibrosis space. Although, this means that NVLS will not be a direct competitor. If NVLS can't find a way to come back from this, then the company doesn't have that much of a bright future in its path.

Looking Forward

It's tragic that the trial did not do much compared to placebo in helping these patients with CF. The truth is that the drug cavosonstat targeting CF was the lead candidate of the pipeline. This is a bad blow for the company which was heavily relying on a positive clinical outcome in this phase 2 study. The NVLS stock will continue to suffer because of this setback. It is not clear whether or not the company will continue to develop the cavosonstat drug in the CF indication. The company says it wants to evaluate the next steps for this program but the truth is that it doesn't have that much of a future left after missing the primary endpoint. The good news is that there is another drug candidate in the pipeline that is being developed to treat asthma. The bad news is that it is still in earlier stage clinical trials. It will take many years before it makes to a phase 2 trial. That means investors will be cautious of investing in this stock as it doesn't have much of a pipeline left.

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[Image courtesy of Pixabay]

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