Sol-Gel Technologies, Ltd. (SLGL) delivered some disappointing news Wednesday, announcing it's ending development of SGT-210 for Darier disease after the company's Phase 1b study came up empty. The vehicle-controlled proof-of-concept trial showed no meaningful difference between the actual drug and the placebo vehicle on efficacy measures.

For context, Darier's disease (also called keratosis follicularis) is a rare inherited skin condition that causes greasy, red-brown, bumpy growths called papules. These typically show up on oily areas of the body like the scalp, chest, and back. It's exactly the kind of unmet medical need that small biotech companies chase, but sometimes the science just doesn't pan out.

After unblinding the Phase 1b data, the results were clear enough that Sol-Gel made a quick decision. Mori Arkin, Executive Chairman of Sol-Gel, stated: "...we have therefore decided not to advance to the next stage of development in this indication. We intend to pursue very small, low-cost feasibility studies in other areas of unmet medical need where the mechanistic rationale for SGT-210 is strong."

The company isn't giving up entirely on SGT-210, though. They're keeping the door open for exploring other potential uses where the drug's mechanism might work better. But they're being smart about it, emphasizing "very small, low-cost" studies rather than burning through cash on ambitious programs.

Arkin added: "We continue to prioritize the successful completion of our Phase 3 program of SGT-610 in Gorlin syndrome and preparatory activities supporting a potential Phase 3 program in high-frequency BCC, subject to successful completion of the Gorlin Phase 3 trial."

That's the real story here. Sol-Gel is refocusing on its lead candidate, SGT-610, which is further along in development for Gorlin syndrome and potentially high-frequency basal cell carcinoma.

Technical Picture Remains Constructive

Despite Wednesday's selloff, Sol-Gel Technologies (SLGL) is showing a surprisingly strong technical setup. The stock is trading well above its key moving averages, with both the 20-day and 50-day simple moving averages indicating positive momentum.

The RSI sits at 57.25, which is neutral territory. That means the stock isn't overbought yet and has room to build momentum before hitting levels that typically signal overextension.

The MACD indicator is above its signal line, pointing to bullish momentum. As long as this holds, traders might view dips as potential buying opportunities rather than the start of a deeper correction.

Key levels to watch: support at $34.50 and resistance at $43.50. If the stock pushes through resistance, it could signal continuation of the broader uptrend. A drop below support, however, might indicate a potential reversal.

Worth noting: the stock formed a golden cross back in June when the 50-day SMA crossed above the 200-day SMA. This crossover is typically viewed as a significant bullish signal and often marks the beginning of sustained upward trends.

Over the past 12 months, SLGL has skyrocketed 735.02%. That's the kind of performance that attracts momentum traders and suggests strong underlying bullish sentiment, even when individual trials don't work out.

Currently trading at 77.2% of its 52-week range, the stock is closer to its highs than lows. That positioning suggests traders should watch resistance levels carefully while remaining aware of potential pullbacks.

Price Action: SLGL stock is down 6.81% at $39.26 at the last check on Wednesday.