Zai Lab has stopped development of a treatment for atopic dermatitis after it failed to beat placebo in a phase 2a trial. The Shanghai-based biotech licensed the candidate from GlaxoSmithKline in 2016 and had planned to power into a phase 3 registration trial on the back of the mid-stage data.

That plan, and the drug itself, now lie on the scrapheap. Zai is yet to provide a breakdown of the data on ZL-3101, also known as Fugan, but the little that is known publicly is damning. ZL-3101 performed no better than placebo on an eczema severity scale over 21 days in 295 Chinese patients with atopic dermatitis, resulting in the phase 2a missing its primary endpoint.

While ZL-3101, a topical formulation of extracts from two Chinese herbs, was safe and well tolerated, Zai is making no attempt to salvage the drug. Investment in the program will stop, enabling Zai to focus resources on its handful of other clinical-phase assets. 

The setback deprives Zai of a way into the atopic dermatitis market but is a relatively minor blow in some regards. Zai paid GSK RMB 4.5 million ($660,000) to license Fugan and another candidate, dubbed Grape, in 2016. The deal put Zai on the hook for milestones and royalties, too, but the failure of Fugan means it will likely only pay a fraction of the potential amount tied to that candidate. 

News of the setback emerged days after Reuters reported Zai is planning to list in Hong Kong, S.A.R., China. Zai raised $172 million through a Nasdaq IPO last year and has since seen Hong Kong, S.A.R., China open its doors to biotech stocks. The Chinese biotech is reportedly planning to float in Hong Kong, S.A.R., China early next year, although it stated it has no "firm plans".

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