Menlo Therapeutics Inc. (NASDAQ: MNLO) shares were slaughtered early on Monday after the firm issued an update for its midstage clinical trial for patients with atopic dermatitis (AD). Unfortunately, the results did not live up to expectations, and it may be back to the drawing board for Menlo.

The firm announced top-line results from MTI-103 (ATOMIK), the Phase 2 clinical trial of serlopitant for the treatment of pruritus in adults and adolescents with a history of AD. The study did not meet its primary or key secondary efficacy endpoints with no statistically significant difference demonstrated between the serlopitant treated groups and the placebo-treated group.

Note that numerical differences favoring the serlopitant treated group were evident at all timepoints and Serlopitant was well-tolerated in this study.

Steve Basta, CEO of Menlo, commented:

While we are disappointed that the results in this Phase 2 trial of pruritus associated with atopic dermatitis did not reach statistical significance and did not show the same magnitude of treatment effect as in our prior pruritus studies, we do see in the results a pattern that shows numerical improvement in each serlopitant treatment group above the placebo group at every timepoint.  This is our third pruritus study of serlopitant.  Reduction of pruritus has been demonstrated in two prior Phase 2 studies, one trial in patients with chronic pruritus and one trial in patients with prurigo nodularis. We are initiating Phase 3 studies in prurigo nodularis this quarter, and we are looking forward to the Phase 2 results in refractory chronic cough in the fourth quarter of this year, and the Phase 2 results in pruritus associated with psoriasis by late 2018 or early 2019.

Excluding Monday’s move, Menlo has outperformed the broad markets, with its stock up nearly 23% since it came public in late-January.

Shares of Menlo closed Friday at $35.22, with a consensus analyst price target of $46.25 and a post-IPO range of $20.50 to $39.86. Following the announcement, the stock was down about 60% at $14.23 in early trading on Monday.

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