Biotech Slaughtered, Down 76%, On A ‘Messy’ Update

Q32 Bio (QTTB) delivered a “messy” update for its eczema and alopecia treatment, leading the biotech stock to collapse amid a series of downgrades and price-target cuts.

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The company tested its drug, bempikibart, in patients with atopic dermatitis and alopecia areata. In the eczema study, an outsized placebo response torpedoed the results. And bempikibart looked less effective than already approved drugs in alopecia treatment, said Piper Sandler analyst Christopher Raymond, who described the results as “messy.”

Now, Q32 Bio is discontinuing its efforts in eczema treatment and running another study in alopecia patients.

Raymond slashed his price target on the biotech stock to 20 from 85. Shares has an even worse fate at Leerink Partners where analyst Thomas Smith lowered his price target to 9 from 68. He also downgraded the stock to a market perform rating from outperform.

Q32 Bio stock crashed 75.6% to 5.95 on the stock market today. Shares hit a record low, underscoring their previous low point at 8.24 in November 2023.

Biotech Stock Hammered On Placebo Effect

In the eczema study, more placebo recipients showed improvement than bempikibart patients — 76% vs. 74% — on a scale called the Eczema Area and Severity Index.

“While the placebo response is among the highest we have observed for AD, QTTB has not identified any specific drivers leading to this outsized response and does not expect to advance bempi in AD,” Leerink’s Smith said in a report.

He notes bempikibart showed a real, “albeit modest” effectiveness signal in alopecia patients. On a scale used to measure symptoms, the Severity of Alopecia Tool, bempikibart recipients had a 16% average improvement, vs. 2% for the placebo group.

However, three placebo patients were excluded from one site based on protocol violations and early treatment discontinuations could have further compounded the signal, he said.

Q32 Bio is now enrolling 20 more patients into an open-label extension study to further assess the benefit of bempikibart in alopecia treatment. In open-label studies, patients knowingly take the experimental treatment.

Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.

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