Drug Development, Results, Setbacks

Watch out below: Dermira axes acne drug after a catastrophic PhIII failure

Dermira set itself up for one of the big stock $DERM catalysts of Q1 with its Phase III acne studies for DRM01. And it got knocked down — hard — Monday morning as it reported the late-stage program had suffered a catastrophic failure.

Tom Wiggans, Dermira

The primary endpoints for the two studies showed that the results for the drug closely mirrored the placebo arm, leaving the company with nothing to show for it. Dermira execs say they will now close down the program and move on.

That wasn’t what the stock touts wanted to hear. Shares were obliterated in the rout, dropping more than 70%.

DRM01 is designed to reduce the production of sebum, finding a new way to treat the skin condition by preventing the oily buildup that triggers an outbreak. That prospect — though hardly a tough unmet medical need in the biotech world — whipped up considerable speculative movement on the stock price.

Some analysts quickly acknowledged their bad signals. Umer Raffat at Evercore ISI noted:

This is a name that I had flagged as carrying 65% probability going into the Ph 3 trial based on our prior analysis + the consistency of DRM01’s data from ph2a + 2b… clearly that didn’t pan out.  I clearly stand corrected.

Failure did not come cheap for Dermira, which recruited 1,500 patients for the studies. But the company does have other drugs to turn to, including DRM04, which is supposed to reduce sweating in kids. The biotech also bought lebrikizumab from Roche after the pharma giant produced some disappointing data for the drug, now being studied for atopic dermatitis.

“We are surprised and extremely disappointed by the results of the Phase III program,” said Tom Wiggans, chairman and chief executive officer of Dermira. “This is disappointing not only for the company, but also for patients who are living with this condition and dermatologists who have been looking for novel therapies to treat them.”


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Biotech Investment Analyst
SV Health Investors Boston, MA
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Recursion Pharmaceuticals Salt Lake City, UT
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Recursion Pharmaceuticals Salt Lake City, UT
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Cadent Therapeutics Cambridge, MA
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