Pharma Bro Warned You: Mast Therapeutics Craters After Drug Flunks Phase III Test, Job Cuts Expected

Published: Sep 22, 2016

Pharma Bro Shkreli Warned You: Mast Therapeutics Craters After Drug Flunks Phase III Test, Job Cuts Expected September 21, 2016
By Alex Keown, Breaking News Staff

NEW YORK – Although he may seem a pariah to many, Martin Shkreli appears to have correctly predicted the fate of Mast Therapeutics as the company’s stock plunged more than 80 percent after its Phase III sickle cell drug, vepoloxamer, failed to achieve its endpoints.

Last week Shkreli, the former head of Turing Pharmaceuticals and KaloBios , made his call regarding Mast on Benzinga’s Premarket Prep.

“This is a company that's probably, I would say, worthless, that's gonna drop 90 percent or more in the next few weeks,” Shkreli said according to the Benzinga write-up.

Shares of Mast are trading at 59 cents this morning.

As a former hedge fund manager, Shkreli is certainly experienced in reading the tea leaves when it comes to investing in the biotech industry. And his prediction came through. Although he offered no specifics as to why he thought Mast would fall, Shkreli suggested the company does not have strong cash reserves and is “praying to hit the lotto.”

However, according to Mast’s announcement on Tuesday, the lotto was not to be had. Sickle cell treatment vepoloxamer did not meet its primary efficacy endpoint of demonstrating a statistically significant reduction in the mean duration of vaso-occlusive crisis (VOC). Mast said there were “no statistically significant differences between treatment groups in the intent-to-treat population across the two secondary efficacy endpoints, rate of re-hospitalization for VOC and the occurrence of acute chest syndrome.” Vaso-occlusions can occur everywhere blood flows and lead to an accumulating disease burden in every organ system with the ultimate loss of vital organ function and significantly reduced lifespan.

Vaso-occlusive crisis is characterized by intense and debilitating pain, which can last for days and even weeks.

Brian Culley, chief executive officer of Mast, said the company is disappointed in the trial results and anticipates terminating all clinical development of vepoloxamer.

“Consequently, while we evaluate our options, we intend to significantly and immediately reduce our operating expenses and continue our efforts with AIR001, our lead asset in heart failure with preserved ejection fraction, which currently is the subject of a 100-patient phase 2 study expected to complete enrollment by the end of 2017," Culley said in a statement.

Although the company did not mention any job cuts in its press release, such a move is likely given the company plans to terminate its research and reduce operating expenses. If layoffs are part of the deal, the company is likely to announce cuts in coming days.

Not known for being humble, Shkreli touted his correct predictions on Twitter and accepted the accolades of online fans and some media outlets that reported his prediction. Shkreli also couldn’t resist mocking the company a bit, suggesting someone should set up a “Bagholder Asset Relief Fund (BARF)” for Mast.

Also, Shkreli had some choice words for Culley on Twitter. Shkreli retweeted Culley, who compared an endorsement by Shkreli to an endorsement from the National Rifle Association. Shkreli responded with “good job with the failed study…” then followed it up by a few derogatory epithets.

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