Why Avalanche Biotechnologies Shares Tumbled -- Again

By Fool.com

What: Shares of Avalanche Biotechnologies , a clinical-stage gene-therapy company focused on developing treatments for diseases of the eye, fell by nearly 15% in after-hours trading yesterday. This drop was triggered by the company's somewhat unexpected second-quarter earnings release after the bell, in which management announced that the company will no longer proceed with a planned midstage study for itsgene-therapy AVA-101, indicated forwet age-related macular degeneration (AMD).

Last June, the company reported that AVA-101 met its primary endpoint ofmaintaining visual acuity with fewer anti-VEGF injections compared to a control group. However, it was unable to beat out the clinical trial data of eitherRoche's Lucentis orRegeneron's Eylea, dashing investors' hopes that the small-cap biopharma could take a big chunk out of their sales in the near future.

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So what: Avalanche was a darling of the small-cap biopharma world prior to the release of AVA-101's midstage data, with the stock climbing over 400% since its IPO at one point. With the potential licensing deal with Regeneron for AVA-101 off the table for now at least, and the company forced to go back to the drawing board, Avalanche's shares are probably destined to continue their recent descent. Before today's drop, Avalanche's shares were already down over 70% for the year.

Now what: According to the press release, Avalanche plans on conducting additionalpreclinical studies to explore the optimal dose and delivery of AVA-101, as well as its other gene-therapy AVA-201, to see if one or both of these therapies can beat out the current standard of care for wet AMD. In a nutshell, Avalanche just went from a promising clinical-stage biopharma company on the verge of a major licensing deal to a preclinical-stage company, with highly uncertain prospects moving forward.

The article Why Avalanche Biotechnologies Shares Tumbled -- Again originally appeared on Fool.com.

George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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