Biotech stock Protagonist Therapeutics (PTGX) crashed Friday after the Food and Drug Administration placed its key drug on hold due to safety questions.
Protagonist is studying the drug, rusfertide, in patients with blood diseases. But mice who received the drug developed tumors under their skin. Now, the FDA says Protagonist must stop all human studies of rusfertide.
In morning trading on today’s stock market, the biotech stock plummeted 57.2% near 19.80.
SVB Leerink analyst Joseph Schwartz expected the biotech stock to dive.
“Considering that rusfertide accounts for the majority of Protagonist’s stock price by our estimation, we expect shares to trade down substantially on the news today,” he said in a note to clients. “However, in our view, not all this value should come out of the stock, as these holds are usually resolved.”
Biotech Stock Crashes On Hold
But Protagonist may struggle hitting its timeline, Schwartz said. The company is submitting safety reports to the FDA, updating investigator and patient documents, and modifying the study protocols.
Investors in the biotech stock were expecting Protagonist to have proof-of-concept data for rusfertide in hereditary hemochromatosis in the second half of 2021, Schwartz said. Plus, investors were hoping for Phase 2 results in polycythemia vera in the fourth quarter.
Still, he kept his outperform rating on the biotech stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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