MW CervoMed's stock craters 77% after failed trial of treatment for rare brain disease

By Ciara Linnane

A midstage trial of a treatment for patients with dementia with Lewy bodies failed to meet its main goals

CervoMed Inc.'s stock cratered early Tuesday after the biotech company said a midstage trial of a treatment for patients with dementia with Lewy bodies, or DLB, failed to meet its main goals.

The stock was last down 77% to mark its biggest one-day selloff in 19 years.

DLB is the third most common degenerative disease of the brain after Alzheimer's disease and Parkinson's disease, affecting about 700,000 people in the U.S. and the same number in the E.U. It's named after the protein deposits, called Lewy bodies, that accumulate in the brain's nerve cells and cause a range of debilitating symptoms affecting cognitive ability, reasoning and motor function. There are no approved treatments.

Boston-based CervoMed (CRVO) said the Phase 2b trial of its neflamapimod did not meet significant statistical thresholds for its primary endpoint of a change in the Clinical Dementia Rating Sum of Boxes, a scale used to measure the severity of dementia.

The therapy also failed to meet secondary endpoints of change from baseline in the Timed Up and Go, or TUG, test; in the Neuropsychological Test Battery, or NTD; and in the Clinician's Global Impression of Change, or CGIC.

The TUG test measures balance and mobility; the NTD measures cognitive abilities such as memory, attention and language; and the CGIC measures a patient's treatment benefit in a clinical trial.

Initial analysis "shows that target plasma drug concentrations were not achieved during the double-blind phase of the trial, which may have adversely impacted trial results," the company said in a statement.

"Obviously, we are disappointed with these results, particularly given our prior clinical experience with neflamapimod in patients with early stage DLB, and we are investigating the reasons for the lower-than-expected plasma drug concentrations," John Alam, chief executive of CervoMed, said in prepared remarks.

The company said it continues to believe neflamapimod has potential as a treatment for DLB and will further analyze data, including a set expected in the first half of 2025 from the first 16 weeks of an open-label extension trial.

In the meantime, however, CervoMed said it will pause preparations for a Phase 3 trial of the drug.

D. Boral Capital downgraded the stock to hold from buy on the news and withdrew its price target.

"Compounding the disappointment, the inability to reach target plasma drug concentrations raises questions about dosing adequacy and trial execution," analyst Jason Kolbert wrote in a note to clients.

While CervoMed emphasizes the drug's potential and plans to analyze pharmacokinetic data, "these issues introduce substantial uncertainty regarding neflamapimod's efficacy in DLB," he wrote. And with the Phase 3 trial now paused, CervoMed's path forward "appears uncertain, limiting near-term upside."

-Ciara Linnane

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December 10, 2024 10:10 ET (15:10 GMT)

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