Investing.com -- Shares of Septerna, Inc. (NASDAQ: SEPN ) tumbled over 60% following the company's announcement that it has discontinued its Phase 1 clinical trial of SEP-786 due to severe unanticipated events involving elevated bilirubin levels in participants. The clinical-stage biotechnology firm, which focuses on GPCR drug discovery, faced a significant setback after two incidents of elevated unconjugated bilirubin were observed without accompanying liver enzyme level elevations.

The decision to halt the trial was made despite the lack of serious adverse events or indications of liver injury, cholestasis, or hemolysis in trial participants. Septerna's CEO, Jeffrey Finer, stated that early signs of pharmacological activity were seen with SEP-786, which reinforced the company's commitment to developing an oral small molecule PTH1R agonist for hypoparathyroidism. He also mentioned that the company plans to select a next-generation candidate from its portfolio of PTH1R agonists to progress towards clinical trials later in the year.

In response to the unexpected trial outcomes, Septerna has initiated non-clinical studies to investigate the underlying mechanism behind the bilirubin elevation. The company's Chief Medical (TASE: PMCN ) Officer, Jae B. Kim, acknowledged that preclinical research and toxicology studies did not predict the off-target effect seen with SEP-786. Despite this setback, Septerna remains on track with another candidate, SEP-631, which is being prepared for clinical trials for mast cell diseases.

As of September 30, 2024, Septerna reported having $137.5 million in cash, cash equivalents, and marketable securities. Following its IPO in October 2024, which raised $302.6 million, the company expects its current cash position to fund operations well into the second half of 2027.

The abrupt discontinuation of the SEP-786 trial represents a significant pivot in Septerna's clinical strategy, as the company now shifts focus to advancing alternative compounds in its pipeline. The market's reaction reflects the heightened risk and uncertainty that such developments can introduce to the biotech sector, where clinical trials serve as critical milestones for emerging therapies.

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