A French biotechnology company saw its stock price crash Tuesday after releasing clinical trial data for an experimental medication designed to treat inflammatory bowel disease, despite the drug demonstrating impressive effectiveness rates.
Abivax stock fell 30% during early trading in Paris, making it the biggest loser on Europe’s STOXX 600 benchmark index. The decline comes after the company’s shares had surged more than 16-fold during the previous year in a remarkable rally.
The experimental medication, called Obefazimod, is an oral treatment being tested for ulcerative colitis, a long-term condition that leads to inflammation and sores in the colon. During a 44-week maintenance trial, clinical remission was achieved by 50.8% of patients taking the 25 mg dosage and 51.3% of those on the 50 mg dosage, while only 10.4% of patients receiving placebo showed improvement.
Both dosage levels successfully reached the study’s primary endpoint, demonstrating placebo-adjusted remission rates of 39.3% and 40.3% respectively, ranking among the most robust results seen in major ulcerative colitis research programs.
Nevertheless, concerns arose when three participants taking the higher 50 mg dose developed cancer cases – one instance each of prostate cancer, breast cancer and colonic dysplasia. According to Abivax’s study report released Monday, researchers determined these cases were not connected to the treatment.
Jefferies analysts told investors in a research note that the cancer cases “broke” their investment recommendation, as these incidents may continue to affect investor sentiment regardless of the underlying cause.
“Even if proven to be not drug-related or very low incidence, we expect an overhang to investor interest, strategic optionality, and commercial uptake,” the analysts explained.
Truist Securities analysts similarly noted that safety questions, with the relationship to the drug still being debated, would likely cause continued stock price fluctuations, despite the medication’s remarkable effectiveness results.
The company did not respond immediately to requests for further comment regarding concerns about the cancer cases.
However, Yale Jen, senior managing director at brokerage Laidlaw & Company, suggested the stock selloff might represent an excessive reaction to safety worries, while describing the overall trial results as a “homerun” for the drug’s development prospects.
