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Chiasma Shares Crater as FDA Rejects Hormone Drug, Asks For More Data

Xconomy Boston — 

Chiasma was on the doorstep of possible of approval of its first drug, a potential treatment for a rare hormonal disorder called acromegaly. Now the Waltham, MA-based company is going to stay there for awhile, because the FDA believes it has a lot more data to accrue before approval is granted.

Late Friday, Chiasma (NASDAQ: CHMA) said that the FDA declined to approve what’s known as octreotide (Mycapssa), a pill the company has been developing for adults with acromegaly. This morning, in a separate statement, Chiasma provided more details, namely that the agency wants the company to run another trial before it’ll consider approval of octreotide.

Shares of Chiasma plummeted more than 54 percent in pre-market trading on Monday. Chiasma will hold a conference call later this morning to discuss the news.

Acromegaly is a rare disease that typically occurs when benign tumors grow on the pituitary gland, leading it to produce too much human growth hormone. The excess HGH causes a host of complications, from an overgrowth of bone that triggers arthritis to serious cardiovascular problems. About 69,000 people worldwide have the disease.

Surgery to remove the tumor is the first option to treat acromegaly. But if that doesn’t work, there are injectable drugs called somatostatin analogues that can lower levels of growth hormone and shrink the tumor; or other drugs that help normalize levels of insulin-like growth factor, which can cause abnormal tissue growth when they’re out of whack. Somatostatin drugs are administered via intramuscular injections once a month. Chiasma’s drug is, essentially, a pill version of these drugs. The company’s core technology is a method of turning injectable drugs into pills, but octreotide is by far its most advanced potential product.

Chiasma had been hoping to win approval of octreotide based on a small, single-arm clinical trial—meaning, the results weren’t compared to patients on a placebo, or another drug.  The FDA told Chiasma that this wasn’t enough. In a statement this morning, Chiasma said the agency “expressed concerns regarding certain aspects” of its single-arm trial and “strongly recommended” that the company run a randomized, blinded, controlled study that is long enough in duration to “ensure that control of disease activity is stable.” (A day before the decision, TheStreet.com posted this explainer as to why the agency might reject octreotide, citing the lack of a randomized trial.)

“We are surprised, disappointed and respectfully disagree with the FDA’s decision,” said Chiasma president and CEO Mark Leuchtenberger, in a statement.

Chiasma will seek a meeting with the FDA to discuss its next steps. It recently started another Phase 3 trial to help its approval case in Europe, but while that trial is randomized and controlled—it compares octreotide to injectable somatostatin drugs—it’s also an open-label trial.

Chiasma originated in Israel, but moved its corporate headquarters to Massachusetts in 2015. The company raised $102 million in an IPO in July 2015, and had $134 million in cash as of March 31.