Shares of Affimed (AFMD) plunged in morning trading after the company suspended trials on a cancer drug following the death of a patient. The company also said two other patients suffered "life-threatening events".

DRUG TRIAL SUSPENSION: Affimed on Monday said it had placed studies of AFM11, its experimental cancer drug, on clinical hold following the death of a patient in its acute lymphoblastic leukemia trial and two life-threating events in its non-Hodgkin lymphoma study. Thirty-three patients have been treated in the two early-stage studies, the company said. Affimed also said it will be working closely with the global health authorities, the Safety Monitoring Committees, and the studies' clinical investigators to review the events, assess all of the data and determine its next steps for the AFM11 program. The clinical hold will not impact the ongoing development of Affimed's NK cell engager programs, which are based on targeting the NK cell receptor CD16A, a different approach than used for AFM11, which targets T cells through CD3, it noted.

ANALYST COMMENTARY: BMO Capital analyst Do Kim told investors in a research note that he believes the clinical hold on AFM11 will likely be temporary, as the three "severe adverse events" cited in the hold were identified as neurotoxicities. Kim, who has an Outperform rating and $5 price target on Affimed shares, lowered his probability of success in ALL to 25% from 30% and kept his probability in NHL at a "low" 15%. He recommends investors buy Affimed shares on weakness since the clinical hold is not likely to become "program ending." SunTrust analyst Peter Lawson lowered his price target on Affimed shares to $5 from $7, but maintained a Buy rating, telling investors in a research note of his own that he sees no read-through to the company's NK cell engager platform, nor does he see any impact on the recent NK cell engager Genentech (RHHBY) deal. Lawson contended that commentary from the management indicates that the "series adverse events" in the study hold are "likely drug-related and from a CD19-related neurotoxicity" and should not impact the ongoing development of AFM13.

PRICE ACTION: In morning trading, shares of Affimed declined nearly 30% to $3.39.