Shares of ImmunoGen Inc. led biotech’s losers on Wednesday, falling 38% in intraday trade after the company disclosed that the U.S. Food and Drug Administration had recommended it run a second Phase 3 trial of an ovarian cancer drug.
A first Phase 3 trial of the biotech’s IMGN, -33.97% investigational drug, called mirvetuximab soravtansine, failed to show that patients on the therapy had better progression-free survival or overall survival than those on chemotherapy. Despite the disappointment, the company had hoped the FDA would consider approving mirvetuximab for a subgroup of patients with ovarian cancer who showed improvement while on the therapy.
However, the subgroup data wasn’t enough for the FDA, which recommended during a recent meeting that ImmunoGen conduct another Phase 3 trial entirely — a costly and time-consuming endeavor that could push the approval process back years.
Although the news hit ImmunoGen’s stock hard, analysts didn’t seem too surprised. “We viewed it as unlikely that the FDA would consider a subgroup analysis,“ Jonathan Chang of SVB Leerink wrote in a note to clients on Wednesday.
There has been some concern among investors about the biotech’s cash position in the face of a new trial. ImmunoGen had previously disclosed that it was conducting an operational review of its business to extend its cash runway, and the company said it had around $270 million in cash and cash equivalents at the end of the first quarter.
During an earnings call with analysts on Wednesday, H.C. Wainwright’s Debjit Chattopadhyay asked ImmunoGen’s management to provide details on how much the first Phase 3 trial had cost so investors could get an idea of how far the company’s cash could go. Management would not provide specifics, but said it was confident it had enough cash on hand.
“I would apply average oncology clinical trial costs to this,” said Anna Berkenblit, the company’s chief medical officer.
“Our existing cash position will be more than sufficient to cover the cost of another study — another Phase 3 study,” ImmunoGen Chief Executive Mark Enyedy said.
ImmunoGen plans to meet with the FDA again to discuss a study design and aims to get a new trial up and running before the end of the year.
Other biotech losers
Solid Biosciences Inc. SLDB, -7.59% also saw a heavy decline in shares on Wednesday. The stock fell 10%, following a 28% decline on Tuesday. The biotech released first-quarter earnings late Monday evening and disclosed a serious adverse event in an early-stage trial of a Duchenne muscular dystrophy drug, which seemed to shake investors’ confidence.
Insys Therapeutics Inc. INSY, -3.23% stock fell 6% on Wednesday. The opioid maker disclosed on Friday that mounting legal expenses and declines in the market for fast-acting fentanyl products could lead it to file for bankruptcy. Shares plunged 74% on Monday and partially rebounded on Tuesday. Earlier this month, a federal jury in Boston convicted five of the company’s former executives and managers of bribing doctors to prescribe Subsys in order to boost profits.
The ProShares Ultra Nasdaq Biotechnology ETF BIB, +1.45% was up 1.3% on Wednesday afternoon. The ETF has gained 11% in the year to date, while the Nasdaq Composite Index COMP, +1.23% has gained 18%. The S&P 500 SPX, +0.72% has gained 14%.
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