Tranzyme, Inc. (NASDAQ: TZYM) is showing the dark side of the risks around biotech initial public offerings. After less than a year since its initial public offering, this stock just lost more than 40% of its market value after its experimental bowel drug candidate failed to improve post-surgery gastrointestinal recovery. This was the first of two late-stage trials and unfortunately it performed no better than the placebo in Phase III.
While a second trial is ongoing, Tranzyme does not plan any new drug application efforts as the company is shifting its focus into an oral program. More data from the second late-stage study is expected to be released late in the second quarter of this year.
The placebo-comparison was in both dose groups. The company’s other effort is focused on an oral drug TZP-102 in a phase II trial aimed at treating diabetic gastroparesis.
Shares were down well over 50% but there has been a bounce as investors still hold out some hope for the company. One thing that may hurt is that the value is now only $71 million after a 43% drop to $2.97. As of the end of 2011, Tranzyme still had $40.9 million in cash and cash equivalents and a total net tangible asset value of about $24.5 million.
Tranzyme may be down, but its prospects are not entirely out here as of today.
JON C. OGG
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