Mast Therapeutics Inc (NYSEMKT:MSTX) Still Reeling From Sickle Cell Disaster


Thought the aftermath from Mast Therapeutics Inc (NYSEMKT:MSTX)’s sickle cell phase III miss for its pipeline drug Vepoloxamer (MST-188) was done for?

Not yet, it seems. Mast plunged another 7.56% yesterday to $0.1137 under the weight of the day’s trading volume of 16.21 million shares.

Adding to Mast’s misery was a downgrade to Market Perform from Outperform by Cowen analyst Ritu Baral who did not specify a price target.

“We are downgrading MSTX to Market Perform on lack of clarity on a path forward after ‘188 missed in its Ph3 trial for sickle cell and the program was discontinued,” the analyst said.

On September 21, the Maxim Group downgraded Mast from Buy to Hold.

Mast Therapeutics Inc (NYSEMKT:MSTX) in damage control mode

Following the MST-188 debacle, Mast on Monday provided a business update on its strategy and business situation.

It intends to wind down its vepoloxamer programs and instead focus on three separate, ongoing, investigator-sponsored Phase 2 clinical studies of AIR001 – a sodium nitrite solution for intermittent inhalation via nebulization and used in the treatment of heart failure with preserved ejection fraction.

Mast had $30.3 million in cash and cash equivalents as at August 31, 2016. The failure of vepoloxamer has triggered a $10 million prepayment which Mast will pay off in October 2016. The balance debt of $3.5 million, and interest thereon, will be paid in monthly instalments through January 1, 2019.

Mast may also invite partnerships in AIR001 and maybe vepoloxamer.

Can Mast Therapeutics Inc (NYSEMKT:MSTX) pull through?

However, Cowen’s Baral notes: “We do not believe there is enough clinical data from the Ph2 AIR001 HpEF program to assign a likelihood of success.”

Investors may feel likewise about their stake in Mast. The stock has effectively done nothing since 2012 – meandering below the $1 level during all that time.

The recent downside price action following the vepoloxamer failure may look huge in percentage terms, but shareholders actually lost most of their money in Mast in 2010 and 2011.


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