Today, global biopharmaceutical company Apellis Pharmaceuticals (NASDAQ:APLS) is sinking, hard. Shares of APLS stock dipped more than 50% in early morning trading, having recovered slightly to a loss of 40% at the time of writing.
Indeed, such a move is indicative of some big news. And given the fact that Apellis is a biopharma play, investors may correctly guess this has to do with trial results.
The company’s Phase 3 trial results of an eye disease treatment came in today. Unfortunately for investors, these results weren’t what investors were expecting.
Let’s dive into what was announced and why this stock is selling off so hard.
APLS Stock Sinking on Clinical Trial Results
Phase 3 trials are among the biggest catalysts for biopharma companies. These trials are considered to be the most crucial for gaining approval for specific drugs. Accordingly, investors in APLS stock appear to have had high hopes for the company’s DERBY and OAKS study for intravitreal pegcetacoplan.
The company’s stock price took off from around $40 per share in April to around $65 per share in late August. However, today’s results brought shares of APLS stock down to as low as $27.50 in intra-day trading.
Well, one of the two studies conducted failed to meet its primary endpoint. The company’s DERBY study did not result in the geographic atrophy (GA) lesion growth reduction the company was hoping for.
With one successful study, Apellis plans on submitting a New Drug Application to the Food and Drug Administrarion (FDA) shortly. However, analysts recently downgraded APLS stock on the “mixed bag” of news. It appears analysts — and the broader market, for that matter — were pricing in high probabilities of success for both trials.
Indeed, all hope is not lost for APLS stock. There’s still a chance the FDA could approve the company’s pegcetacoplan drug. However, it appears the road to approval isn’t as sure as it was yesterday. Given that every stock represents statistical probabilities of success in different ways, this news has understandably impacted investors.
Where APLS stock will go from here remains to be seen. However, this will certainly be an intriguing stock to keep on the watch list for now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.