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Investing.com -- Shares of Tectonic plummeted 41% Tuesday following news that a similar drug developed by Eli Lilly (NYSE:LLY) for chronic kidney disease was terminated due to a lack of foreseeable clinical benefit. The market’s reaction reflects concerns over the future of TECX’s lead product candidate, TX45, which targets the same RXFP1 receptor as Lilly’s volenrelaxin.
The termination of Lilly’s volenrelaxin trial, which also showed no benefit in a related heart failure study, has raised doubts about the efficacy of TECX’s TX45 in treating certain heart failure patients. Investors are eagerly awaiting early-stage results from TX45, expected within the current quarter, for clearer indications of the drug’s potential.
Leerink, which maintains an ’outperform’ rating at $69 price target on TECX, expressed in a client note that the discontinuation of Lilly’s trial has "caused significant concern about the likelihood of success of TX45." This sentiment appears to be shared by the broader market, as evidenced by the sharp decline in Tectonic’s stock price.
"LLY (OP) terminated its volenrelaxin CKD (which it had just initiated in 4Q24) due to failure of a “related heart failure study,” which has caused significant concern about the likelihood of success of TX45 in PH-HFpEF. Recall that both volenrelaxin and TX45 are long-acting relaxin mechanism candidates for cardiopulmonary diseases," Leerink analyst David Risinger commented.
The pharmaceutical industry is known for its high-risk and high-reward nature, with clinical trial outcomes being a significant driver of stock performance. The news of volenrelaxin’s trial termination serves as a reminder of the challenges faced by companies like Tectonic in bringing new therapies to market. Investors will be closely monitoring TECX’s next steps as they seek to understand the implications of recent developments on the company’s drug pipeline and overall market position.
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