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Sunday, May 12, 2024

Aeon’s Migraine: Stock Plummets as Drug Test Fails

Aeon Biopharma Inc.’s stock plunged 53% in intraday trading May 3 on the company’s announcement of disappointing results from testing of its migraine drug.

The Irvine-based clinical-stage company (NYSE: AEON) said its ABP-450 treatment for the prevention of chronic migraine did no better than placebo in a Phase 2 trial.

Aeon’s stock quickly fell to about $1.60 per share in intraday trading, down 90% from its all-time closing high of $15.75 on March 15.

The company was “surprised and disappointed that ABP-450 did not demonstrate statistically significant superiority over placebo in this interim readout,” Marc Forth, Aeon’s president and chief executive, said in a statement.

“We are conducting additional analyses of the interim data to understand the highly abnormal and unexpected placebo effect and further evaluate the results of this study to determine the best path forward.”

Aeon’s stock has been on a roller coaster since it went public last July.

The firm has been developing its proprietary botulinum toxin complex to treat migraines, which affect about 1 billion people worldwide, making it the third-most prevalent illness in the world.

Aeon is also studying medication to treat cervical dystonia, where the neck and shoulders have painful twisting movements. Aeon spun off in 2020 from Newport Beach-based Alphaeon, owned by local entrepreneur Robert Grant.

Aeon licenses ABP-450, a toxin, from Daewoong Pharmaceutical Co., a South Korean-based pharmaceutical manufacturer that has invested tens of millions of dollars and has 17% of the shares. Aeon uses the same ABP-450 toxin as Newport Beach-based Evolus Inc., whose flagship neurotoxin product, Jeuveau, competes with Allergan’s Botox in the aesthetics industry.

After Aeon went public through a special purpose acquisition company, also known as a SPAC, last July, the shares began trading around $10 before falling to around $3.37 a month later. Then it started a slow climb, boosted by a January announcement of positive clinical data for its medication that treats cervical dystonia and post-traumatic stress disorder.

By March 18, Aeon reached an all-time high of $17.17 in intraday trading.

The Ride Down

Then the bottom began falling out:

• On March 18, Aeon announced a “productive end-of-Phase 2 meeting.” The Food and Drug Administration meeting followed the Phase 2 data in episodic migraine that had been released in October, and which supported advancing ABP-450 injection into the proposed pivotal Phase 3 program.

As part of the updated development plan, the company said it was conducting an interim analysis of the ongoing Phase 2 study of ABP-450 for the preventive treatment of chronic migraine and anticipates releasing the data in this year’s second quarter.

• That same day, it announced an agreement for a private placement of $15 million in senior secured convertible notes with Daewoong. Proceeds from the private placement will be used to support the late-stage clinical development of ABP-450 and for general working capital purposes.

• On March 29, it reported a fourth-quarter loss of $26.2 million, narrower than the $34.6 million loss in the same period a year before. It also showed that its cash fell to $5.2 million, more than a two-thirds drop from $16.2 million on Sept. 30.

• Also on that day, the company said it would redeem all its outstanding public warrants in exchange for shares. When it went public, it issued 9.2 million public warrants, which gives the owner a right to buy the stock under certain conditions. Exactly how many shares will be issued to warrant holders haven’t yet been disclosed. The company reported 37.2 million common shares as of Dec. 31.

After those four announcements, the stock began a dive, reaching as low as $3.80 by April 25.

Then the bottom completely fell out on May 3 when Aeon released the result of that interim analysis when it reported its Phase 2 trial to treat migraines on ABP-450 didn’t meet its primary endpoint.

The primary endpoint of mean reduction in migraine days over a 13-to-24-week period in 325 patients randomized across three arms showed a reduction of 8.5 days in one case, 7.7 days in a second case while the placebo case showed an 8.4-day reduction.

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