Here’s Why These Two Biotechnology Companies Took A Hit On Monday: Neothetics, Inc. (NASDAQ:NEOT) and Matinas BioPharma Holdings, Inc. (NYSEMKT:MTNB)


In the biotechnology space, things can turn on a dime, and two companies more than any others found that out during the US session on Monday. Both companies closed out last week relatively positively and it looked as though this positivity could spill over into the early week this week. Not so. Both took sharp hits to their market capitalization as and when the markets opened and failed to recover any substantial amount of the loss taken before session close.

Here is a look at the two companies in question, what drove the action, and what we expect to happen next for each.

The two companies unfortunate enough to have made our list today are Neothetics, Inc. (NASDAQ:NEOT) and Matinas BioPharma Holdings, Inc. (NYSE MKT:MTNB).

So, let’s kick thing off with Neothetics.

Both of today’s moves are data-driven, with both deriving from phase 2 trials of their respective lead development assets.  In the case of Neothetics, the trial was investigating the safety and efficacy of a drug called LIPO-202, which the company is trying to get approved as a therapy in the US for the reduction of submental subcutaneous fat. For those not familiar with this indication, the submental area is the region under the chin, so submental fat is excess fat under the chin. There are two versions of this sort of fat, subcutaneous, which is the one we’re looking at here, and subplatysmal, which is when the fat is deep in the platysmal muscle and, by proxy, more difficult to palpate.

The idea behind the drug is rooted in an already approved compound called salmeterol xinafoate, which is an active ingredient of various FDA-approved inhaled products and is what’s called a long-acting ß2-adrenergic receptor agonist. Neothetics believed that it could harness this MOA to trigger the body’s natural process of metabolizing stored triglycerides (fat), which would then result in a reduction in size and volume of the fat cells in the neck. It is a nice idea, but as per the latest data, it doesn’t seem to work. We don’t have too much detail on the specifics of the trial, but we know that it was a proof of concept study and that – seemingly – the company failed to garner proof of concept in the back of its completion.

Here’s the statement from the company’s press release detailing the failure:

“LIPO-202 did not demonstrate improvement on any efficacy measurements or separation from placebo. LIPO-202 continued to show a benign safety profile.”

The comment on safety is pretty irrelevant; as mentioned this is an already approved asset and it is generally regarded as safe – there were never going to be any real safety issues apart from potentially in relation to the administration method, but this doesn’t seem to have been the case. From an efficacy perspective, the word benign seems to fit well in this instance also.

There was basically no difference between the drug and placebo.

So what does this mean going forward? It’s tough to see this program continuing in this indication without any sign of potential clinical benefit. With that said, this company has taken a real hit on the news, and is down 66% as things stand, meaning we could see a bounce as the biotechnology markets turn to refocus on the company’s deeper pipeline.

Next up, Matinas.

As mentioned, this one is again a phase 2 study and, again, it’s not turned out well for the company and its shareholders. Matinas is attempting to develop an antifungal treatment called MAT2203, and as per the most recent data, put the drug through its paces in an indication targeting a condition called vulvovaginal candidiasis (VVC). The current standard of care in the syndication is an antibiotic called fluconazole and – while the company suggested otherwise in its press release – the trial was set up to compare the efficacy of Matinas’ asset with that of fluconazole.

As it turns out, MAT2203 fell well short of fluconazole in this regard.

The drug demonstrated a clinical cure in 52% of patients at 200 mg/day and 55% of patients at 400 mg/day, compared to 75% of patients on fluconazole. Against a secondary endpoint, a composite clinical cure score of signs and symptoms at Day 12, MAT2203 demonstrated an 81% improvement in clinical symptoms at 200 mg/day and 80% improvement at 400 mg/day. This compared to 94% improvement in clinical symptoms for the patients on fluconazole.

Basically, the drug fell short in all regards.

The pathway forward for this one is unclear. The drug has shown promise in other indications and bacterial resistance will play into this situation long-term, but for now, these are disappointing data, and the company is down as a result.

At last close, Matinas traded for a 27% discount to its pre-announcement cap.


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