February 19, 2016
By Alex Keown, BioSpace.com Breaking News Staff
SAN DIEGO -- Neothetics, Inc. stock is plummeting this morning after the company abruptly announced George Mahaffey, chairman and chief executive officer, resigned his position, effective immediately.
Neothetics stock is down almost 10 percent from its opening price of 87 cents per share, currently trading at 74 cents per share, following the news of Mahaffey’s resignation. Its stock has been in a steady decline since August of 2015, when it was trading at a high of $14.53.
In response to the loss of its CEO, Neothetics said it has formed a committee to oversee day-to-day operations until a replacement is found. In its statement this morning, the company did not provide a reason for the abrupt resignation of Mahaffey. However, his resignation follows the company’s December announcement that its experimental drug for the reduction of abdominal bulges, LIPO-202, failed in two late stage trials. Both studies evaluating the safety and efficacy of LIPO-202 failed to meet its primary and secondary endpoints. LIPO-202 is an injectable formulation of salmeterol xinafoate, which is expected to break down fat cells. The Phase III trials included 1,584 patients. The trial’s co-primary endpoints were the “proportion of subjects who reported an improvement of at least one point on the Patient-Global Abdominal Perception Scale (P-GAPS) and an improvement of at least two points on the Clinician Photonumeric Scale (CPnS) and the proportion of subjects who reported an improvement of at least two points on the P-GAPS and an improvement of at least two points on the CPnS,” the company said.
On its website, Neothetics advertises LIPO-202 as having “the potential to be a best-in-class injection for localized fat reduction and body contouring, offering an approximately five minute or less, non-surgical procedure that effectively and safely reduces abdominal bulging in non-obese patients, with no downtime.”
“We are disappointed by these unequivocally negative results. We expected LIPO-202 to demonstrate better efficacy based on the results we saw in the Phase 2b RESET trial. We continue to analyze the data from AbCONTOUR1 and AbCONTOUR2 to fully understand the trial results and to evaluate our future plans,” Mahaffey said in December.
In addition to Neothetic’s very brief announcement of Mahaffey’s resignation, the company said it is evaluating a path forward with LIPO-202. The company said it will provide a more detailed update in its 10-K and 4Q2015 release.
Alongside LIPO-202, Neothetics is also developing, LIPO-102, an injectable form of a combination of salmeterol xinafoate and fluticasone propionate. LIPO-102 is being developed for the thyroid-related eye disease caused by expansion of fat and muscle behind the eye. The drug is primarily being developed for the “orphan indication of symptomatic exophthalmos,” a protrusion of the eye from the orbit, the company said.
In addition to the loss of its CEO, Neothetics also reported preliminary fourth quarter 2015 cash and cash equivalents of $37.7 million as of Dec. 31, 2015.
