On Monday, Tobira Therapeutics (TBRA) fell by 60% after the company announced that its phase 2b trial failed to meet the primary endpoint of the study. The phase 2b trial, known as CENTAUR, recruited up to 289 patients to treat patients with non-alcoholic steatohepatitis -- NASH (in other words, fatty liver disease). 

The company used its drug cenicriviroc to treat these patients with NASH. As noted above, the primary endpoint, which tested for a possible improvement in fibrosis without any worsening, was not achieved. The company's drug was compared to a placebo compound for this primary endpoint, and the final results was not good. 

The final result showed that the drug obtained a 20% improvement over placebo with a 10% improvement. This obtained  p-value of 0.02 which is not statistically significant, since the goal was a two-point reduction in NAFLD Activity Score; thus why the primary endpoint of the study failed. Setting aside the primary endpoint failure, the company did report that it met on one of the two secondary endpoints of the study. 

Tobira stated that its drug showed anti-fibrotic effect across all stages of NASH F1 to F3 over one year. Thus although Tobira failed to meet on the primary endpoint in this phase 2b trial, it still can attempt a phase 3 trial. That is because the FDA has indicated that a drug that shows an anti-fibrotic effect in NASH can be considered for FDA approval. 

With this in mind, the company states that it will meet with the FDA to set up a phase 3 trial using cenicrivoric in patients with NASH. The hope is that the phase 3 trial will yet again see an anti-fibrotic effect in these patients. The company expects to initiate such a phase 3 trial in 2017, and the trial could take 2 to 3 years thereafter. 

While the stock sold off today, there is still hope for the long term. As long as the FDA agrees to run a phase 3 trial with anti-fibrosis as the primary endpoint, then this miss of the primary endpoint in phase 2b won't mean much. All that matters is if the company can reproduce the anti-fibrotic effect seen.