Bausch Health plunges 7% as Phase 3 liver disease trials fail
Global RED-C studies involving 1,000+ patients fail to meet primary endpoint for hepatic encephalopathy treatment
Bausch Health Companies Inc. shares tumbled 7.2% on Friday after the company disclosed that two pivotal Phase 3 clinical trials for its experimental liver disease treatment failed to achieve their primary endpoint, dealing a significant setback to the drugmaker's pipeline ambitions.
The Canadian pharmaceutical company announced that its global RED-C clinical program, evaluating amorphous-rifaximin solid soluble dispersion (SSD) for the primary prevention of hepatic encephalopathy in adults with liver cirrhosis, did not meet its primary efficacy goals. The stock closed at $6.09, wiping $187 million from its market capitalization, which now stands at approximately $2.47 billion.
Hepatic encephalopathy is a serious neurological complication of liver disease that causes confusion, altered consciousness, and can lead to coma. The RED-C program comprised two randomized, double-blind, placebo-controlled trials involving more than 1,000 patients across 398 clinical sites in 17 countries. While the drug demonstrated safety and was well-tolerated by participants, it failed to show statistically significant effectiveness in delaying the first episode of hepatic encephalopathy compared to placebo.
"We are disappointed with these results, especially given that there is currently no approved treatment for these patients," said Thomas J. Appio, chief executive officer of Bausch Health. "We are currently reviewing the full dataset to identify potential new development opportunities. We remain committed to developing new treatments for patients in hepatology and other therapeutic areas."
The clinical trial failure represents a major blow to Bausch Health's hepatology pipeline, as the company had positioned the RED-C program as a potential growth driver. Analysts had viewed successful development of amorphous-rifaximin SSD as important for the company's diversified therapeutic strategy, which also includes eye health, gastroenterology, and dermatology through its controlling interest in Bausch + Lomb.
Wall Street analysts maintain a cautious outlook on the stock. According to [MarketBeat data], Bausch Health currently carries a consensus "Hold" rating from six equities research analysts, with an average target price of $8.50. Truist Securities maintained a "Hold" rating in early January and raised its price target to $8 from $7, suggesting that some analysts had already priced in modest expectations for the RED-C program.
The trial failure underscores the high-risk nature of pharmaceutical development, where late-stage clinical setbacks can quickly erase investor confidence. Despite the disappointing results, Bausch Health emphasized its ongoing commitment to the hepatology space and other therapeutic areas. The company is scheduled to report its fourth-quarter and full-year 2025 financial results on February 18, 2026, which may provide further insight into how the company plans to adjust its development strategy following this setback.
Investors will be watching closely for any indication of whether Bausch Health intends to pivot its resources toward other pipeline candidates or pursue a modified clinical development program for amorphous-rifaximin SSD. The company's ability to recover from this clinical failure will depend largely on the performance of its existing product portfolio and the progress of its remaining pipeline assets in the coming quarters.