Shares of Nivalis Therapeutics Inc. plunged 53% toward a record low in premarket trade Tuesday, after a Phase 2 trial of its cystic fibrosis treatment failed its primary endpoint. Although the two doses of cavosonstat were well tolerated, they failed to show an improvement in lung function. The company said it plans to continue to investigate the potential of cavosonstat. But RW Baird analyst Brian Skorney followed by downgraded Nivalis to neutral from outperform, saying he believes "the absence of any clinical effect indicates that cavosonstat isn't a relevant drug for cystic fibrosis." Analyst Thomas Shrader at Stifel Nicolaus cut his rating to hold from buy, saying that while Nivalis has indicated it has backup compounds to cavosonstat, the efficacy signals suggest "the therapeutic premise may be dead." The stock, which went public on June 17, 2015 at an initial public offering price of $14, had dropped 19% year to date through Monday, while the iShares Nasdaq Biotechnology ETF had lost 17% and the S&P 500 had gained 7.7%.
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