Gossamer Bio's PAH drug fails Phase 3 trial, sending shares crashing

Gossamer Bio's experimental drug seralutinib has failed a key Phase 3 trial for pulmonary arterial hypertension (PAH). The setback triggered a stock downgrade and sent shares tumbling to around $0.42. Investors now await the company's next earnings report on May 12, as uncertainty grows over the drug's future.

The failure of seralutinib, also known as PROSERA, marks a sharp turn for Gossamer Bio. Earlier Phase 2 trials had shown promise, with improvements in patients' exercise capacity and reduced pulmonary vascular resistance. However, the latest Phase 3 results dashed hopes, prompting analysts at Cantor Fitzgerald to lower their rating from 'Overweight' to 'Neutral'.

The company's stock has suffered heavily this year, dropping by about 86%. Its market value now stands at roughly $99 million, a steep decline from previous levels. Analysts remain split, with price targets ranging from as low as $0.30 to as high as $15.00, averaging around $5.43.

Gossamer Bio has scheduled a 'Type C' meeting with the U.S. Food and Drug Administration (FDA) in June. The discussions will focus on potential regulatory paths forward, despite the trial's failure. Concrete feedback from the FDA is expected by July.

The failed trial puts seralutinib's entire development programme in jeopardy. With shares near historic lows and mixed analyst opinions, the company's next steps will be closely watched. The upcoming FDA meeting could determine whether the drug has any remaining prospects.