Diabetes Biotech Stock Plummets After FDA Clinical Hold

Biomea Fusion experienced a significant stock decline, plummeting 60%, after the FDA imposed a full clinical hold on its diabetes program due to concerns about liver toxicity. The company ended March with $145.3 million in cash. The clinical hold affects their candidate, BMF-219, which aims to inhibit the menin protein from interfering in the beta cell replication and expansion process. This mechanism had shown potential in preclinical tests, where it improved beta cell mass, prompting Biomea to begin studies for Type 1 and Type 2 diabetes.

The trouble began when the FDA identified potential drug-induced liver damage in Type 2 diabetes patients during the dose-escalation portion of Biomea's phase 1/2 study. As a result, the FDA halted this study and also paused a trial involving Type 1 diabetes patients. Biomea noted that the problematic study involved doses of up to 400 mg, while the phase 2 segment of the Type 2 diabetes trial is evaluating doses of 100 mg and 200 mg across its initial expansion cohorts. The company suggested that factors such as different food intake regimens, medical histories, and concomitant medications might have contributed to the observed liver enzyme elevations.

In response to the FDA's decision, Biomea is working toward resolving the issue. CEO Thomas Butler stated that the company is fully collaborating with the FDA to devise a plan to ensure patient safety and hopes to resume the studies as soon as they receive authorization. Butler emphasized their commitment to advancing BMF-219, based on the overall safety and efficacy data gathered so far for diabetes.

Despite having $145.3 million in cash at the end of March, Biomea had previously warned investors in May that their financial resources would not be sufficient to sustain operations for at least a year from the issuance date of their unaudited condensed financial statements. The company indicated that they would need to raise additional funds, admitting substantial doubt about their ability to continue as a going concern.

The clinical hold significantly impacted Biomea's financial standing, reducing its share price to $4.50 before the market opened on Friday. This is a stark contrast to its stock price, which traded above $40 a year ago. During this hold, Biomea plans to continue ongoing data collection. Prior to the FDA's regulatory action, the publication of top-line Week 26 data from their Type 1 and Type 2 diabetes studies was identified as a milestone for the year.

Biomea Fusion is now focusing on addressing the FDA's concerns to lift the clinical hold and continue its research. The biotech firm remains optimistic about their candidate BMF-219 and its potential in treating diabetes, despite the current financial and regulatory challenges they face.