Rezolute Stock Plummets 90% on Failed Drug Trial
Phase 3 study of lead drug candidate RZ358 for a rare pediatric disease fails to meet primary goals, erasing over $1 billion in market value.
Shares of Rezolute, Inc. (NASDAQ: RZLT) collapsed by approximately 90% in pre-market trading on Tuesday after the biopharmaceutical company announced that its pivotal Phase 3 study for its lead drug candidate, ersodetug (RZ358), failed to achieve its primary and secondary endpoints.
The catastrophic results for the sunRIZE study, which evaluated the drug in patients with congenital hyperinsulinism (HI), a rare and life-threatening pediatric disease, sent the company's valuation into a freefall. Rezolute, which had a market capitalization that recently approached $1 billion, now faces a crisis of confidence from investors and its future has been cast into serious doubt.
According to the company's official announcement, the trial did not demonstrate a statistically significant reduction in hypoglycemia events in patients treated with ersodetug compared to a placebo. While the highest dose of the drug did reduce these events by about 45%, the placebo arm showed a surprisingly high 40% improvement, neutralizing the drug's perceived benefit.
"We are disappointed that the sunRIZE study did not meet its primary endpoint," said Nevan Elam, Chief Executive Officer and Founder of Rezolute. Despite the outcome, the company noted it plans to meet with the U.S. Food and Drug Administration (FDA) to discuss potential next steps for the program, citing the drug's Breakthrough Therapy Designation.
Congenital HI causes the pancreas to secrete excessive insulin, leading to persistent and dangerously low blood sugar levels in infants and children, which can result in seizures, brain damage, and death. The failure of ersodetug is a significant setback for patients and families seeking new treatment options for the debilitating condition.
The market reaction was swift and brutal. The stock, which had traded at a 52-week high of $11.46 and had a 50-day moving average above $9.00, was last seen trading under $1.00 per share. The plunge effectively wiped out the company's value, which had been built on the promise of RZ358 as a blockbuster therapy.
Compounding the company's woes, the top-tier law firm Hagens Berman announced it has launched an investigation into Rezolute for potentially misleading investors. The investigation focuses on whether the company made overly positive statements about the drug's prospects that may have lacked a reasonable basis.
While Rezolute's management highlighted a generally favorable safety profile for ersodetug, the trial results noted that two participants had to discontinue the study due to serious hypersensitivity reactions. The most common side effect was hypertrichosis, or excessive hair growth.
With its lead asset now in jeopardy, Rezolute's future likely rests on its remaining, earlier-stage clinical programs. The company noted that a separate Phase 3 study, upLIFT, which is evaluating the same drug for tumor-related hyperinsulinism, is still ongoing with results expected in the second half of 2026. However, with the credibility of its lead molecule now severely damaged, the path forward for the Redwood City-based firm appears exceptionally challenging.