Today, Kodiak Sciences (NASDAQ:KOD) has posted one of the worst single-day losses I’ve seen in some time. Currently, KOD stock is down more than 80%, losing four-fifths of its value in a single day.
Obviously, a massive catalyst has prompted this price action. The news? Kodiak Sciences reported that a key drug trial missed its primary endpoint. In plain English, that means the company’s key drug wasn’t effective in solving the problem it was supposed to solve.
This news couldn’t have come on a worse day as well. Equity markets have been in turmoil as Russia-Ukraine tensions continue to heat up. Worries that economic sanctions could further inflation concerns — and lead to faster rate hikes — have also hurt most growth stocks. For biotech and pharma companies, this is certainly not a bullish environment to be investing.
That said, this company-specific catalyst today is a big one. Let’s dive into why it’s such a big deal — and why KOD stock is selling off heavily today.
KOD Stock Falls on Disappointing Drug Trial Results
Today, Kodiak Sciences provided a press release on its Phase 2b/3 clinical trial of KSI-301. This drug is aimed at patients with “age-related macular degeneration.” Similar to other drugs put out by rivals such as Regeneron (NASDAQ:REGN), investors were hopeful that the drug could provide breakthrough efficacy, solving a widespread problem with a growing market.
However, this study came short of meeting its objectives.
Kodiak Sciences reported that 60% of its patients did see gains and the drug was well-tolerated, meeting safety goals. However, the company also reported that KSI-301 “did not meet the primary efficacy endpoint of showing non-inferior visual acuity gains for subjects dosed on extended regimens compared to aflibercept given every eight weeks.”
In short, that means this drug is not likely to go anywhere. In the pharma space, this sort of announcement is detrimental on many levels. Investors banking on the success of KSI-301 now have to look further down the pipeline for growth. Additionally, future drugs may see less investor enthusiasm given the current letdown.
On the date of publication, Chris MacDonald did not hold (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.