Shaky early results on novel drugs send biotech stocks crashing

Several promising biotech companies crashed on Wall Street on Thursday morning after releasing preliminary data that suggested safety or efficacy concerns about experimental drugs they have in development.

The worst blows were dealt to the companies whose experimental drugs had poor safety profiles — namely, Canada’s Trillium Therapeutics and Achillion Pharmaceuticals of New Haven, Conn.

Rising star Bluebird Bio, a much-watched and heavily hyped gene therapy company based in Cambridge, Mass., also dropped sharply, falling 17 percent by mid-morning, as investors were not impressed with early data on its blood disorder treatments. By end of the day it had rebounded slightly but was still down 11 percent.

Its treatment for sickle cell anemia, in particular, has been closely watched — but data from a small trial suggested it works well in just a fraction of patients. One patient is proving to be a super-responder, remaining free of symptoms 18 months after receiving Bluebird’s Lentiglobin gene therapy. But another seven sickle cell patients aren’t responding as well.

Bluebird’s beta thalassemia drug seems to be working well in patients with what’s called the non beta zero/beta zero subtype — and it appears to have prevented them from needing blood transfusions over the course of a year. But it’s less effective for patients with another subtype, though it did reduce their need for blood transfusions by 60 percent.

Preliminary data on several drugs was released all at once on Thursday morning, in the form of short abstracts from companies who will be presenting more detailed information at the American Society of Hematology meeting in San Diego early next month.

Veteran analysts cautioned that such abstracts are partial and preliminary. But the less-than-stellar results came on the heels of soft earnings reports from a number of big biotechs — and just days before an election that could usher in a crackdown on high prescription drug prices. And that was enough to send stocks reeling.

“What I’m seeing in general is if there’s anything that a company reports that’s even nominally negative, the stock gets destroyed,” said Brian Skorney, an analyst at Baird. “Investors are so spooked about the sector that any liquidity event is a selling event. If it appears negative, they want to get out ahead of anyone else, which just leads to relentless selling.”

Trillium Therapeutics took the hardest hit: After announcing that its experimental cancer therapy had a poor safety profile, the company’s stock fell 53 percent by end of day Thursday. Trillium’s early data is particularly disappointing, because there’s been an upsurge in interest in the target it’s been chasing — a protein called CD47 that Stanford researchers have found proliferating on the surface of tumor cells.

There’s been a great deal of interest in wrangling this CD47 and turning it into a therapeutic — hence a great deal of interest in Trillium, a small biotech. But some patients experienced a worrisome, though reversible, spike in liver enzymes. The company called it a “dose-limiting toxicity” and said it would test out a lower dose.

“If they’re limited in the strength of the dose they’re allowed to use, that limits the effectiveness, potentially, of the treatment — so that’s a big deal,” said investor Brad Loncar, who runs a cancer immunotherapy fund.

Achillion Therapeutics crashed 28 percent by the end of the day, thanks to data showing its drug, which is being tested in a rare blood disorder called paroxysmal nocturnal hemoglobinuria, might dangerously elevate the levels of enzymes in the liver.

Meanwhile, shares of another gene therapy darling, Spark Therapeutics of Philadelphia, dropped nearly 20 percent by midmorning, after its disclosure that one of the patients in its trial developed an immune response to the company’s hemophilia B treatment.

This serious bleeding disorder is caused in part by a deficiency of a protein called Factor IX, which helps blood to clot. Patients these days are treated with infusions of Factor IX . So Spark’s approach is to use gene therapy to encourage the body to produce more Factor IX.

The therapy worked as planned in four patients, increasing the Factor IX levels their blood. But in the patient whose immune system reacted to Spark’s gene therapy, the opposite happened: His Factor IX levels dropped. The patient was treated with steroids and his disease wasn’t exacerbated by the gene therapy, but this effect certainly impacted investors’ confidence in the company. The stock rebounded slightly but was still down 14 percent by day’s end.

This story was updated on Thursday afternoon with the latest stock numbers.