Fremont, CA-based Zosano ($ZSAN) delivered bitter news to its investors on Monday evening, tipping off the market that Eli Lilly ($LLY) had bowed out of their osteoporosis partnership while it had also decided to halt work on a daily dosing program. The news, delivered during a bearish period for biotech stocks, eviscerated its stock, which dropped 43% and reduced its market cap to a mere $42 million.
Zosano and Lilly teamed up back in early 2014, when the pharma giant made a $15 million equity investment in the biotech and promised up to $425 million in milestones for a collaboration using a formulation of parathyroid hormone 1-34 (PTH) delivered with Zosano's microneedle technology to treat osteoporosis.
Faced with Lilly's exit, the company opted to hit the brakes on its daily ZP-PTH program--after Japanese regulators indicated that a significant amount of trial work remained ahead of any approval--and circled its wagons around the weekly ZP-PTH effort. Zosano noted that it needs to concentrate its resources around the work most closely poised for commercialization.
"While we have received positive feedback from the FDA and were on track to initiate a Phase III trial of daily ZP-PTH in the U.S., we believe that committing significant capital and other resources to development of Daily ZP-PTH is not a prudent investment given the recent feedback received from Japanese regulatory authorities and the significant milestone payments associated with approval in Japan," said CEO Vikram Lamba. "Although we have made the decision to terminate our contract with Lilly due to business reasons, we are extremely thankful for their support and collaboration. Our weekly ZP-PTH patch has strong clinical data and is well-differentiated compared to competitive products. As we finalize our plans for further development of weekly ZP-PTH, we look forward to announcing results from a Phase II trial of our ZP-Glucagon product within the next few weeks and results from a Phase 1 trial of our ZP-Triptan product before the end of 2015."
This has been a rough year for Zosano. Novo Nordisk ($NVO) dumped their diabetes collaboration in July. The biotech pulled off an IPO in January, but its stock price quickly plunged.
- here's the release