Why Neothetics Is Getting Destroyed

By Chris Lange Updated Jan 13, 4:04PM EST · Published Dec 15, 1:15PM EST

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Why Neothetics Is Getting Destroyed — © Thinkstock

Neothetics Inc. (NASDAQ: NEOT) was absolutely crashed in Tuesday’s session after announcing top-line results from a late stage trial that fell short. The stock has fallen as far as to hit a new all-time low. The company announced top-line results from its Abcontour1 and Abcounter2 U.S.-based pivotal Phase 3 trials to evaluate the safety and efficacy of LIPO-202 for the reduction of central abdominal bulging due to subcutaneous fat.

In both studies, LIPO-202 did not meet its co-primary composite and secondary endpoints. The co-primary endpoints referred to the proportion of subjects who reported an improvement of at least one point on the Patient-Global Abdominal Perception Scale (P-GAPS) and an improvement of at least two points on the Clinician Photonumeric Scale (CPnS), and the proportion of subjects who reported an improvement of at least two points on the P-GAPS and an improvement of at least two points on the CPnS. LIPO-202 continued to show a benign safety profile in these trials.

For some background: LIPO-202 is an injectable formulation of salmeterol xinafoate, a well-known long-acting ß2-adrenergic receptor agonist used in several FDA-approved drugs, including Addvair for asthma. Neothetics’ studies suggest that salmeterol xinafoate also activates ß2-adrenergic receptors on fat cells, triggering the breakdown of triglycerides stored in the cells.
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George Mahaffey, president and CEO of Neothetics, said:

We are disappointed by these unequivocally negative results. We expected LIPO-202 to demonstrate better efficacy based on the results we saw in the Phase 2b Reset trial. We would like to express our sincere gratitude to our investigators and patients who participated in this study. We continue to analyze the data from Abcontour1 and Abcontour2 to fully understand the trial results and to evaluate our future plans.

As 2015 comes to a close, Neothetics has underperformed the market, with the stock down nearly 5% to Monday’s close, before the massive downturn in Tuesday’s session.

Shares of Neothetics were last trading down about 81% at $1.36 Tuesday afternoon, with a consensus analyst price target of $17.67 and a 52-week trading range of $1.36 to $15.05.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.