GI Dynamics plunges 50% after FDA halts trial

GI Dynamics (ASX:GID) said late yesterday that the FDA halted enrollment in a clinical trial of its EndoBarrier weight loss device after a few patients developed liver infections, sending share prices plunging by 50%.

Lexington, Mass.-based GI Dynamics said the FDA stopped enrollment in its325-patient Endo trial after 4 patients developed bacterial infections known as hepatic abscesses. The trial will continue for the patients GI Dynamics has already enrolled, the company said.

"Hepatic abscess is a known event related to the use of EndoBarrier but has recently presented at a higher than anticipated rate in the Endo trial. The FDA has therefore requested additional information to further assess the risk:benefit profile of the EndoBarrier in the Endo trial," GI Dynamics said, noting a 1% hepatic abscess rate for the 2,900 EndoBarriers shipped commercially since 2009.

"Patient safety is GI Dynamics’ first priority. The company has already implemented several risk mitigation strategies in the Endo trial and is expeditiously working to submit the requested information to the FDA for their review in an effort to resume enrollment," the company said.

The Australian stock exchange yesterday put a trading halt on shares of GI Dynamics, which won FDA approval for the Endo trial in October 2012, after the company said it would soon release a "material announcement."

GID shares, which closed at 30¢ Australian before the trading halt, plunged to 15¢ apiece on news of the FDA’s move to halt enrollment.

Last week GI Dynamics released its preliminary results for last year, saying it expects to report revenue growth of 21.7% to $2.8 million. Net losses were -$48.2 million for the year, up 35.4% from -$35.6 million during 2013.