Why Dermira Shares Are Getting Crushed

Dermira Inc. (NASDAQ: DERM) watched its shares absolutely collapse early on Monday after the firm reported disappointing results from its late-stage trials in patients with acne vulgaris. Essentially, Dermira’s Phase 3 trials of the investigational treatment olumacostat glasaretil (formerly DRM01) did not meet the co-primary endpoints.

The co-primary endpoints of CLAREOS-1 and CLAREOS-2 were the absolute changes from baseline in inflammatory and non-inflammatory lesion counts and the proportion of patients achieving at least a two-grade improvement from baseline to a final grade of zero or one on the five-point Investigator’s Global Assessment scale. Each endpoint was measured on the face at the end of the 12-week treatment period.

None of the co-primary endpoint results were statistically significant.

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Unfortunately, these results most likely will precipitate the discontinuation of this program. According to Luis Peña, chief development officer of Dermira:

We are continuing to analyze the outcome of the olumacostat glasaretil Phase 3 program. However, based on the information we have to date, we expect to discontinue the development program. We want to thank our employees, investigators and partners for their commitments to the acne development program and, most importantly, the patients who participated in these trials.

Tom Wiggans, board chair and chief executive of Dermira, took an optimistic approach looking ahead:

We remain dedicated to bringing new treatments to people living with chronic, underserved skin conditions. As we look ahead, we are focused on building a commercial organization to support the anticipated launch of glycopyrronium tosylate for axillary hyperhidrosis later this year, subject to FDA approval, as well as our Phase 2b trial evaluating lebrikizumab as a potential treatment for moderate-to-severe atopic dermatitis, for which we expect to announce topline data in the first half of 2019.

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Excluding Monday’s move, Dermira had underperformed the markets, with its stock down about 29% in the past 52 weeks. In just 2018 alone, the stock was down nearly 10%.

Shares of Dermira were last seen down 64% at $9.06, with a consensus analyst price target of $43.88 and a 52-week trading range of $9.00 to $38.39.

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