Mast Therapeutics Inc (NYSEMKT:MSTX) announced yesterday that its phase III EPIC study results proved to be a “surprising disappointment,” after the firm’s pipeline drug vepoloxamer, a rheological agent designed to improve blood patency, failed to meet its primary endpoint.

This is especially a bitter pill for the sickle cell community as well as treating physicians, as there is a significant unmet need in treating sickle cell pain crises, the most prevalent and severe form of the disease. Patients endure crises when sickle-shaped red blood cells block blood flow, and had vepoloxamer indicated clinical efficacy, this would have been a beneficial asset to the sickle cell community.

Now, the biotech firm is left to end all clinical development of the drug, which also includes halting a phase II study in heart failure.

In reaction, Maxim analyst Jason McCarthy with frustration concedes, “We got it wrong” on vepoloxamer, and subsequently downgrades from a Buy to a Hold rating on shares of MSTX while removing the prior $5 price target.

McCarthy notes, “Following the expected $10M in operating expenses in 3Q and the $10M debt payment triggered by the EPIC data, we estimate the company now has $15M on the balance sheet. The company is now in capital preservation mode and plans to cut expenses to ~$1M per month, leaving roughly a year’s worth of capital. Given the decline in valuation, the stock is now trading near cash.”

The analyst questions where the firm can go from here, as AIR001, a nitric oxide nebulizer for heart failure currently in a phase II study funded largely by the Heart Failure Network, and MSTX’s remaining pipeline drug is just in the beginning stages of enrollment. Data likely will not be available until at least 2018.

MSTX can try to assess whether vepoloxamer holds any residual value on the heels of this failure, but from the analyst’s viewpoint, “At MSTX’s current valuation, we believe the damage is done.”

“We will wait to see the complete data from the EPIC trial and understand if the heart failure study might move forward,” McCarthy concludes.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Jason McCarthy is ranked #822 out of 4,175 analysts. McCarthy has a 44% success rate and earns 4.0% in his yearly returns. When recommending MSTX, McCarthy garners 53.8% in average profits on the stock.

TipRanks analytics exhibit MSTX as a Buy. Based on 3 analysts polled in the last 3 months, 2 rate a Buy on MSTX, while 1 maintains a Hold. The consensus price target stands at $3.33, marking a 2,675% upside from where the stock is currently trading.screen-shot-09-22-16-at-01-58-pm