Chiasma Plunges 14%; Feuerstein Source Says FDA Will Reject Co.'s Therapy Capsules

Shares of Chiasma Inc (NASDAQ: CHMA) plunged more than 14 percent Thursday morning ahead of the U.S. Food and Drug Administration's decision on Friday to approve or reject the company's therapy.

Chiasma is a biopharmaceutical company that focuses on the treatment of orphan diseases. The status of its oral treatment for acromegaly, a capsule known as Mycapssa, will be in focus on Friday.

The Street's biotechnology expert Adam Feuerstein stated that an investor source believes the FDA will reject Chiasma's capsules because data from a single-arm study failed to demonstrate a clinically meaningful benefit among patients.

Feuerstein added that the disease is already treatable with existing injectable drugs. As such, there is no unmet medical need that would convince the FDA to approve Mycapssa given the "subpar" study results.

"Using the more common and stricter definition of response, only 30% to 40% of acromegaly patients responded to Mycapssa treatment, according to Chiasma's published study data," Feuerstein argued. "That's below the 50% response threshold needed to demonstrate clinically meaningful efficacy."

"My investor source has a good track record of predicting negative clinical trials and FDA rejections," he concluded. "In this case, he believes FDA rejects Mycapssa on Friday. If that happens, Chiasma's stock price should fall and his short sale will make money."