A small biotech firm just plummeted 82% after abandoning a drug candidate due to failed phase 2 trial

• Shares of Forte Biosciences plunged as much as 82% after the company said it would ditch its FB-401 drug candidate.
• The drug failed to meet its primary endpoint in a phase 2 trial studying the treatment of atopic dermatitis.
• The negative results led one analyst to lower its price target on the company to $4 from $105.
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A failed drug candidate has sent shares of Forte Biosciences plunging as much as 82% in Friday's trading session.

Forte said on Thursday after the market close that it would abandon its FB-401 drug candidate that was developed for the treatment of atopic dermititis. The move came after the drug failed to meet its primary endpoint in a phase two trial.

"The topline data is disappointing and we will continue to analyze the data; however, given this readout we will not continue to advance FB-401," Forte CEO Paul Wagner said. The company canceled a planned conference call for September 7 given the failed drug results.

Forte said it still has cash and cash equivalents of about $51 million as of June 30, which may only last the company one year based on its 2020 annual net loss of about $46 million.

The disappointing drug results caught some analysts by surprise. Four analysts downgraded Forte on Friday from Buy to either Sell or Neutral/Hold, with Chardan Capital Markets slashing its price target by 96% to $4 from $105.