Macrocure share price plunges after trial failure

Nissim Mashiach
Nissim Mashiach

The Phase III clinical trial for CureXcell for treatment of venous leg ulcers is not expected to meet its main target.

Biomedical company Macrocure Ltd.(Nasdaq:MCUR) lost $138 million in market cap at the end of last week, after the company reported the failure of its clinical trial. The share price plummeted 75% on Thursday, and after a significant upward correction on Friday, closed at $4.50, a loss of 63% in two days, reflected a current market cap of $82 million.

Macrocure held its IPO a year ago at $10 a share. The company is developing a drug for healing wounds, based on microphages white blood cells originating in byproducts of blood units. The company is managed by president CEO Nissim Mashiach, former COO and VP at Omrix Biopharmaceuticals.

Last Wednesday, the company announced initial results from its Phase III clinical trial (the most advanced) for CureXcell, its leading product, for treatments of venous leg ulcers (VLU). The company announcement said that the trial was not expected to meet its main target. "While we are disappointed at the results of the VLU trial, given the positive clinical results we have seen among over 5,000 patients in Israel, we continue to believe that the technology has clinical use for patients with chronic wounds and difficult-to-heal wounds," Mashiach said. "We will assess the data collected in the trial in order to determine the right path to take, including the possibility of another Phase III trial among patients with hard-to-heal wounds below the knee." Together with its product for treating VLU, Macrocure is also conducting a trial of another platform for treatments of diabetic foot ulcers (DFU).

This product has been approved for marketing in Israel. Mashiach added that the company was still committed to both its technology and it ability to provide innovative solutions for patients, noting that the result of the DFU clinical trial will be obtained in October. According to data published yesterday by the company, the DFU market amounts to $1.9 billion, while the VLU market is larger - $4 billion. Following the disappointing trial results, analysts lowered their recommendations for Macrocure.

Oppenheimer lowered its recommendation from "Market outperform" to "Market perform" without a target price, while the previous target price was $20. Credit Suisse also cut its recommendation from "Market outperform" to "Market perform," and lowered its target price from $15 to $5, 11% above the market price. Oppenheimer analyst Steven Lichtman wrote, "Historically, DFU trials have had more success than VLU. Two successful trials are required for product approval, however, and therefore a third trial will likely be needed given yesterday's announcement."

According to Lichtman, the company has enough cash for these trials ($35.9 million, as of the end of the second quarter), but in view of the loss of regulatory visibility, he lowered his recommendation. At the same time, Credit Suisse analyst Matthew Keeler wrote that under the best scenario, the delay in Macrocure obtaining marketing approval on the US would be 30-36 months, compared with the previous expectation of approval in 2018.

The big losers on paper from the drop in Macrocure's share price are businessman Yitzhak (Viatcheslav) Mirilashvili (a loss of $25.2 million); the Pontifax fund, managed by cofounders CEO Tomer Kariv and managing partner Ran Nussbaum (which owns 11.2% of the company shares, and suffered a $14 million loss on paper); Viola Private Equity, with a similar loss; and Mashiach, who has lost $6.5 million on paper.

Published by Globes [online], Israel business news - www.globes-online.com - on August 23, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Nissim Mashiach
Nissim Mashiach
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