Gossamer Bio's stock collapses 86% after failed PAH drug trial

Gossamer Bio is facing major setbacks after its experimental drug, seralutinib, failed a critical Phase 3 trial for pulmonary arterial hypertension (PAH). The company's stock has crashed by around 86% since January, dropping to roughly $0.42 per share and pushing its market value below $100 million.

The drug, seralutinib, had shown promise in earlier Phase 1 and 2 studies for treating PAH. However, the Phase 3 PROCERA trial missed its primary goal, putting the entire development programme in doubt. Gossamer Bio now plans a 'Type C' meeting with the U.S. Food and Drug Administration (FDA) in June to explore whether regulatory approval remains possible. A decision from the FDA is expected by July.

The trial's failure has triggered a wave of downgrades from financial firms. Barclays and Wedbush cut their outlooks in late February, and Cantor Fitzgerald recently lowered its rating from 'Overweight' to 'Neutral'. Despite the setback, opinions on the company remain split: two analysts recommend selling, while four still rate it a 'buy', with price targets ranging from $0.30 to $15.00. Gossamer Bio is also preparing for its next quarterly earnings report, due on May 12. Meanwhile, the company has announced plans for another Phase 3 study, SERENADA, with key results not expected until February 2026.

The failed trial has left Gossamer Bio in a precarious position, with its stock now trading as a penny share. The upcoming FDA meeting in June will determine whether seralutinib can still move forward. If approval is denied, the company's future could hinge on the delayed SERENADA study results.