The biotech space can be fickle, and data driven sentiment can reverse a company’s fortunes extremely quickly. Two companies in the sector were on the receiving end of such a reversal on Monday, and unfortunately for both, sentiment shifted negatively. With this said, here’s a look at what happened, and what to expect going forward for the two companies in question – ProNAi Therapeutics Inc (NASDAQ:DNAI) and Ocular Therapeutix Inc (NASDAQ:OCUL).

First up, ProNai. The company offered up some insight into the progress of its lead development candidate pre market on Monday, and it things don’t look good. The candidate in question, PNT2258, is under investigation (well, was, and we’ll get to this shortly) in two oncology indications – B cell lymphoma and what’s called Richter’s transformation, which is a type of leukemia that involves a changing of the cancer from leukemia to lymphoma. Regardless, it’s trivial now. Why? Because the company just collected and released topline from a phase II in both indications, and based on the data, decided to discontinue its studies.

We don’t know too much detail as to why the discontinuation came in as the best option, but we do know that the treatment only demonstrated what ProNai referred to as “modest efficacy”. Modest, but not enough to justify a continuation of the study into a pivotal trial.

So what’s next? Well, ProNai still has a candidate called PNT141, which is a small molecule inhibitor of what’s called CDC7 – the enzyme associated with cell division. It’s preclinical right now, but CDC7 inhibitors potentially have a wide range of applications in the oncology space, and it looks as though the company is going to put the full force of its (admittedly) robust balance sheet behind this drug.

From an in or out perspective, ProNai stock is down nearly 70% on its Friday close, which might be something of an oversell. As things stand, however, the company’s valuation is essentially rooted in its cash balance and asset value, and the long term potential of a preclinical candidate. Cash came in at a little over $140 million at last count, and total assets at about $143 million. With a current market capitalization of just $62 million, the numbers speak for themselves. A slow burner, but one to watch, and a potential discount entry based purely on the quantitative side of the company.

So let’s move on to Ocular. This company just reported data from a pivotal trial of Dextenza – its lead candidate under investigation for the treatment of allergic conjunctivitis – colloquially known as pinkeye. The trial has a primary endpoint of a reduction in what’s called ocular itching, which was defined as the difference in the mean scores in itching between a group of patients that received active treatment and a placebo group, at three different time points across a seven-day period. The data showed some slight advantage weighted towards the active group, but far from convincing, and almost certainly not enough to get the treatment approved by way of a New Drug Application (NDA) if submitted as is.

On the announcement, and as mentioned, Ocular took a pretty heavy hit. At market close on Friday, the company traded for a little under $12 a share. By market close on Monday, it had sold off to $6.81 – a 42.5% discount across the single Monday period. Compounding the negative sentiment is that in a first phase III trial (this one was the second of two) the data hinted at a decent level of efficacy. This caused a rush to buy into Ocular, on the assumption that the then ongoing second phase III would also deliver. Now it hasn’t, the same speculators that rushed into the company post trial one are rushing out post trial two.

So what now? Ocular is setting up a meeting with the FDA over the coming months to discuss the trial, and where to go from here. Chances are a third pivotal will be required before the FDA will accept an NDA, and this will cost money. Ocular had about $46 million cash on hand at the end of March, and this would likely be sufficient o fund a third phase III, but it will be tight – and therein lies the forward risk.