NEW YORK – Shares of Avalanche Biotechnologies plunged after Wall Street was disappointed with clinical trial results for its drug AVA-101, an experimental treatment for "wet" age-related macular degeneration.
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The company's stock dropped $21.83, or 56 percent, to $17.05 Tuesday. The company's IPO in July priced at $17 a share, but its stock hadn't traded below $22.
AVA-101 is a gene therapy designed to treat "wet" age-related macular degeneration, the leading cause of blindness in the elderly. The condition is often treated with drugs that are injected into the eye every month or two, but Avalanche says it thinks AVA-101 could keep working for a year or more. It's the only drug Avalanche has in clinical testing.
The yearlong study was designed to demonstrate the safety of AVA-101, but researchers also gathered data on how the drug worked compared to Roche's drug Lucentis.
At the start of the trial, patients were given an injection of Lucentis. Some were injected with AVA-101 one week later, and all of the patients got a second Lucentis injection four weeks after the start of the trial. After that point, they only got injections when their physicians felt it was necessary. Those were called "rescue" injections.
Avalanche Biotechnologies Inc. said nine of the 21 patients treated with AVA-101 had stable or improved vision with two rescue injections or fewer. That compares to one out of 11 patients in the Lucentis group.
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The company also said vision for patients treated with AVA-101 improved while the Lucentis patients' vision got worse over the course of the study.
Analyst Tim Lugo of William Blair & Co. said the results were "mixed" overall, with the Lucentis-treated patients doing surprisingly well. He said it will take a while until another clinical trial makes things clearer. He downgraded Avalanche shares to "Market Perform" from "Outperform" and cut his price target to $24 per share from $53.
The initial public offering of Menlo Park, California-based Avalanche Biotechnologies raised $102 million. The stock opened trading at $25 and climbed to a high of $62.48 on Jan. 8. The shares began sliding the next week, and by early February they had lost almost half their value.