The Food and Drug Administration placed a study of Arcellx's multiple myeloma drug on hold after a patient died, leading ACLX stock to crumble Tuesday.
The patient's death was a "perfect storm" of misfortune, SVB Securities analyst Daina Graybosch said. Normally, a patient with rapidly progressing disease like this wouldn't have been included in Arcellx's study. Further, the patient didn't receive adequate treatment for a side effect of the drug.
"We take an optimistic read on the events preceding the hold and believe the mitigation actions may actually improve the likelihood of a good result from (the study)," she said in a report.
On today's stock market, ACLX stock toppled 7.2% and closed at 33.23.
Analysts Remain Bullish On ACLX Stock
Arcellx's drug belongs to the CAR-T class. These treatments involve removing a patient's immune cells and training them to fight cancer before infusing them back into the patient.
The patient who died had an aggressive form of cancer that worsened to plasma cell leukemia before receiving Arcellx's drug. Normally, that patient would have been excluded from the study, Needham analyst Gil Blum said in a report. He has a buy rating on ACLX stock.
Further, the patient experienced cytokine release syndrome. CRS is a common side effect for CAR-T drugs. But Arcellx believes the patient didn't receive adequate treatment for the side effect, SVB's Graybosch said.
"Arcellx management believes the complex circumstances contributed to the FDA placing the program on hold," she said. "In contrast, the study's (data safety and monitoring board) had recommended that they continue the study while implementing changes to prevent similar cases."
Graybosch kept her outperform rating on ACLX stock.
Best-In-Class Treatment?
Needham's Blum says Arcellx — which is partnered with Gilead Sciences — could have a best-in-class treatment for multiple myeloma.
"Arcellx has been actively communicating with the FDA and currently does not anticipate delays in timelines," he said. "The company may seek to take this opportunity to further tighten its clinical protocols, specifically with regard to bridging therapy."
Meanwhile, shares of competitor Legend Biotech rose 3.1% to close at 72.25. Legend sells an approved CAR-T treatment for multiple myeloma called Carvykti in partnership with Johnson & Johnson.
Arcellx is trying to close Legend's three-year lead with Carvykti, RBC Capital Markets analyst Brian Abrahams said in a report. He notes patient deaths aren't uncommon in multiple myeloma treatment studies. Nine patients out of 113 died in one of Legend's Carvykti studies.
"We do not necessarily believe that this will be a showstopper for Arcellx as Gilead/Arcellx may be able to resolve this issue with the FDA," he said.
He kept his sector perform rating on Gilead stock and didn't list a rating for ACLX stock.
ACLX Stock Is Highly Rated
Shares of Arcellx have a strong IBD Digital Relative Strength Rating of 95, putting them in the top 5% of all stocks when it comes to 12-month performance.
ACLX stock broke out of a consolidation with a buy point at 35.26 in April, MarketSmith.com shows. Shares had risen into a profit-taking zone before settling back into a buy zone last week. On Tuesday, they undercut their entry.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
