Nivalis' Stock Plunges Following Failed CF Trial

Nivalis (NASDAQ:NVLS) investors woke to a nasty surprise Tuesday morning: half of the company’s value was wiped out in after hours trading as a result of a failed clinical trial. Nivalis had been at work on a cystic fibrosis (CF) drug called cavosonstat, and it was this lead clinical candidate that generated much of the interest in its 2015 IPO. Despite the drug’s new disappointing data, Nivalis says they’re not done with cavosonstat. The future of the drug remains up in the air today … and so too does Nivalis’ own.

Clinical trial results

The midstage trial evaluated cavosonstat’s safety and efficacy in treating CF patients with two copies of the F508del-CFTR mutation, patients who were currently being treated with Orkambi. And while the drug proved well-tolerated, it failed to meet its primary endpoint—that is, it did not improve lung function when compared to the placebo. The drug also failed to reduce sweat chloride reduction at 12 weeks.
Investors jumped ship in response to the news, with stock nearing a record low on Tuesday morning. But Nivalis isn’t ready to give up on cavosonstat—at least not yet.

The way forward

“We plan to continue to investigate the therapeutic potential of cavosonstat and our S-nitrosoglutathione reductase inhibitor portfolio to determine next steps,” said Jon Congleton, Nivalis’ chief exec.
Dave Rodman, the company’s chief medical officer and executive VP of discovery, echoed his boss: “These data help inform the overall body of CF research, and we remain dedicated to completing our current clinical CF research program.”
But analysts aren’t on board. MarketWatch reports that Brian Skorney of RW Baird downgraded Nivalis to neutral from outperform, noting that “the absence of any clinical effect indicates that cavosonstat isn’t a relevant drug for cystic fibrosis.”
Others share that sentiment. “The therapeutic premise may be dead,” said Thomas Shrader, an analyst at Stifel Nicolaus. He downgraded his rating of the stock to a hold.
If they’re right, Nivalis could be in trouble. The company focuses exclusively on treatments for CF, and while it has other compounds in development, they’re all, like cavosonstat, S-nitrosoglutathione reductase inhibitors.

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Securities Disclosure: I, Chelsea Pratt, hold no direct investment interest in any company mentioned in this article.