Leap Therapeutics Plummets 27% on Strategic Overhaul and Cash Burn: A Biotech Drama Unfolds

Summary
• Leap Therapeutics (LPTX) slashes workforce by 75% and initiates strategic alternatives review
• Updated clinical data from DeFianCe study shows mixed signals for DKN-01
• Cash reserves plummet to $18.1M from $78.5M in Q2 2024
• Intraday price swings from $0.30 high to $0.2323 low highlight investor panic

Leap Therapeutics has become the day’s most volatile biotech stock, with its share price collapsing 27% following a strategic overhaul and aggressive cost-cutting. The company’s Q2 2025 earnings report revealed a $16.6M net loss, driven by a $4.5M restructuring charge and a 75% workforce reduction. While clinical data for DKN-01 showed statistical significance in specific patient subsets, the broader market reacted to the company’s dire cash position and lack of near-term revenue drivers.

Strategic Restructuring and Cash Burn Trigger Sharp Selloff
Leap Therapeutics’ 27% intraday plunge stems from a perfect storm of operational and financial headwinds. The company announced a 75% workforce reduction, incurring a $4.5M restructuring charge, and initiated a strategic alternatives review to explore asset sales or partnerships. Despite positive clinical data for DKN-01 in colorectal cancer trials, investors focused on the $18.1M cash balance—a 77% drop from Q2 2024—and the absence of revenue-generating milestones. The lack of a clear path to profitability, combined with the board’s admission of exploring 'strategic alternatives,' triggered a liquidity-driven selloff as traders anticipated further capital constraints.

Navigating Volatility: ETFs and Options in a Bearish Climate
• 200-day average: 1.2309 (far above current price) • RSI: 42.89 (oversold) • MACD: -0.0043 (bearish) • Bollinger Bands: 0.2984–0.3705 (price near lower band)

Leap Therapeutics is in a short-term bearish consolidation phase, with technical indicators pointing to continued downside risk. Key support levels at $0.2984 (lower Bollinger Band) and $0.2223 (52W low) are critical to monitor. The 30-day RSI at 42.89 suggests oversold conditions, but without a catalyst for reversal, the stock is likely to test its 52W low. No leveraged ETFs are available for direct correlation, but biotech sector ETFs like XLK (XLF) could offer indirect exposure to broader market sentiment.

Options Analysis: No tradable options are listed for LPTX, limiting direct speculative plays. However, the stock’s volatility profile (high beta of -0.28) suggests that any near-term news—positive or negative—could trigger sharp swings. Aggressive short-term traders may consider a bearish iron condor or a short straddle if the stock remains range-bound between $0.23 and $0.30.

Backtest Leap Therapeutics Stock Performance
The backtest of LPTX's performance after a -27% intraday plunge reveals a mixed outlook with varying win rates and returns over different time frames. While the 3-Day, 10-Day, and 30-Day win rates are relatively high at 44.57%, 42.93%, and 43.34%, respectively, the overall returns are negative, with a -0.40% return over 3 days, a -1.47% return over 10 days, and a -2.43% return over 30 days. The maximum return during the backtest period was only 0.87%, which occurred on day 59, indicating that the stock largely recovered but did not exceed its pre-plunge levels significantly.

Critical Crossroads: Leap Therapeutics Faces Make-or-Break Q3
Leap Therapeutics stands at a pivotal inflection point, with its survival hinging on the success of its strategic alternatives review and the ability to secure partnerships for DKN-01 and FL-501. The stock’s 27% drop reflects investor skepticism about its cash runway and lack of near-term revenue drivers. While the 52W low at $0.2223 looms as a psychological floor, a breakdown below $0.25 could trigger further panic selling. Meanwhile, sector leader Amgen (AMGN) is up 0.69%, underscoring the market’s preference for established biotech names. Investors should watch for a catalyst—either a partnership announcement or a liquidity event—to determine whether LPTX can stabilize its share price or face delisting risks. Action Step: Monitor the $0.25 level for a potential short-term bounce or a decisive breakdown into the 52W low.