I'll share a few thoughts on today's events. Feel free to disagree or to ignore them.
-My suspicion is that the elevated enzymes were at least in part due to patient behaviors. Clearly, not all patients experienced these problems.
-Even if much or most of the problem is due to patient behavior, it's still hugely problematic overall. Investor confidence is broken and I would guess it unlikely that big Pharma would strike up a partnership given today's events & the uncertainty they have created.
-This will undoubtedly, at best, delay Phase 3. It will also prove financially costly as the news release said "As the AME study was designed in part to identify doses for the initial Phase III trial, these findings indicate that further research is warranted with respect to both the optimal dose range and potential improvements to the formulation." Not good to be this uncertain about dosing heading into phase 3. Keep in mind that they have no formal trial efficacy data on doses below 150 mg if that's what they have to use moving forward.
-Undoubtedly the Phase 3 study now carries more risk, given that dosing is undecided, and a lowering of dose to say 75 mg could make it tougher to beat the placebo on efficacy. The more they control for safety, the more it puts efficacy uncertain. The more efficacy they produce, the more likely it is that liver enzyme complications appear. Obviously, having to re-examine both dose and formulation at this point is not good.
-I also think it will be tougher for them to gain partnership backing for phase 3 expenses. Yes, they have a decent amount of cash but I would argue that their financial picture is now much more uncertain. There may be numerous previously unexpected expenses arising following today's news. Even though this may not be directly Dan's fault, it still reflects very poorly on management and gives an amateur impression to anyone taking a look at the company.
-Even if much or most of the problem ends up being attributed to patient behavior, you have to ask yourself how likely is a non die-hard to invest anytime soon? This is the second problem they've had with liver. They can certainly clear up some of the uncertainty regarding the cause, but that still leaves significant uncertainty regarding the path forward. The market does not look favorably on uncertainty. I'm not sure what the catalyst would be that would cause share price to increase significantly in the coming months.