E Applied Genetic Technology Tumbles 32% On Eye Study Problems

On Tuesday, Applied Genetic Technology (AGTC) tumbled 32% after reporting problems with its gene trial in treating patients with a rare eye disorder. The company even reported earnings for the fiscal fourth quarter, and those earnings were mixed. The stock is not being punished for its mixed earnings report. Most pharmaceutical companies in the clinical stage of testing don't generate revenue, therefore investors are more concerned about the trials themselves. 

This is where the fall of 32% in the AGTC stock comes in. The reason for the fall is that there were a few problems with the clinical trials that the company is running. With respect to the XLRS phase 1/2 trial where patients have a rare retina problem, the company noted that it had only recruited a total of eight patients. That's way below the needed recruitment of 27. The company states that stricter recruitment criteria is the reason for the problem,and it would attempt to add additional clinical trial sites to rectify the problem. 

Another problem stems in the phase 1/2 ACHMB3 clinical trial as well. Only two patients have been recruited into that trial. The company blames vendor errors as the cause for this problem. This is not good where two trials that are partnered with Biogen (BIIB) are enrolling at a slow pace. On top of the slow recruitment problems, there is another minor problem that may be causing today's slide as well. 

The trial is treating patients with a gene therapy in the patient eye. Considering that the eye is very sensitive a drug needs to be pretty safe. The problem is that in the XLRS study the company noted that patients had mild to moderate inflammation after treatment with the company's drug. Some patients' inflammation resolved on its own, but some patients had to take oral corticosteroids to resolve the inflammation. This trial should be monitored by investors to see that this pattern of patients having eye inflammation doesn't worsen. 

Disclosure: None.

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