Sydney hedge fund Regal Partners Ltd. faced a devastating setback after its investment in Immutep Ltd. collapsed by 93%, wiping out most of the biotech firm's A$582 million ($412 million) market value. The Australian company halted trials of its lung cancer drug, triggering the catastrophic share price decline.

Regal Partners had backed Immutep, an immunotherapy developer, but the trial suspension proved catastrophic. The biotech's shares plunged on Friday after it announced the decision to stop testing its lead drug candidate in lung cancer patients. This represents one of the most severe biotech failures in recent Australian market history.

The collapse highlights the extreme risks hedge funds take when investing in early-stage biotech companies. For Regal Partners, the Immutep debacle comes as a fresh blow to its portfolio, demonstrating how quickly a promising drug candidate can become worthless when clinical trials fail. The fund now faces significant losses from this single investment gone wrong.