Why Tetraphase Pharmaceuticals Inc Stock Was Annihilated Today

What: Shares ofTetraphase Pharmaceuticals, a clinical stage biopharmaceutical company with a focus on creating antibiotics for drug-resistant bacteria, shed more than 78% of its value today on huge trading volume after the company released disappointing clinical news related to its lead product candidate.

So what: The company announced that its Phase 3 IGNITE2 clinical trail, which was testing its flagship drug eravacycline's ability to treat complicated urinary tract infections, failed to meet its primary endpoint. The study showed that the experimental antibiotic failed to show showstatistically significant non-inferiority when compared to levofloxacin, a currently available generic antibiotic.

GuyMacdonald, Tetraphase's President and CEO, released this statement in the reported results:

Now what:As eravacycline is the company's only product candidate that is beyond the preclinical stage, it is no surprise to see that the market reacted so violently to the news released today.

Source: Tetraphase

This share price movement today should act as a reminder to all small-cap biopharmaceutical investors that bad things can happen to a company at any time, even when its lead product candidate holds huge promise, and that a company's share price can evaporate based on negative clinical news. Given the uncertainty about the future of this company's pipeline, I wouldn't look at this huge drop as a buying opportunity, and I think investors would be wise to look elsewhere for investment opportunities.

The article Why Tetraphase Pharmaceuticals Inc Stock Was Annihilated Today originally appeared on Fool.com.

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