Biotech stocks Argenx and Immunovant surged Thursday — while Tourmaline shares plummeted — after a Japanese rival unveiled disappointing results for its muscle disease treatment.
Tokyo-based Chugai Pharmaceutical tested its drug in patients with generalized myasthenia gravis, a neuromuscular condition that causes weakness in the voluntary muscles. After 24 weeks, patients who received Chugai's satralizumab showed statistically significant improvements, but "the results did not reach our expectations on the degree of clinical benefit," Chugai said in a news release.
Biotech Stocks Diverge On Chugai News
The results are a boon for Argenx, which sells a treatment for generalized myasthenia gravis called Vyvgart. Immunovant has a drug in Phase 3 testing for the condition. Their drugs work by blocking the FcRn receptor, which has ties to inflammatory diseases. On the other hand, the drugs from Chugai and Tourmaline block an inflammatory cytokine called IL-6.
Biotech stock Tourmaline had soared on expectations that Chugai's study would prove the benefit of blocking IL-6 in another condition. Tourmaline is testing the mechanism in patients with thyroid eye disease. Meanwhile, Argenx and Immunovant stocks have been under pressure.
Leerink Partners analyst Thomas Smith noted Tourmaline stock had climbed 164% this year, beating out a 6.6% rise of the SPDR S&P Biotech exchange-traded fund. But on Thursday, the biotech stock undercut its 50-day and 200-day moving averages, MarketSurge.com shows.
"We expect Tourmaline bulls to argue that positive results from the study represent incremental mechanism of action validation with room for multiple players," he said in a note. "Overall, while we expect some headline pressure on Tourmaline, we continue to like their IL-6 program from here based on their multiple ongoing Phase 2 studies in thyroid eye disease and atherosclerotic cardiovascular disease."
Smith kept his outperform rating on Tourmaline stock.
One Rival Bites The Dust
Meanwhile, the results are a boon for Argenx and Immunovant stocks. Argenx's Vyvgart is the only approved drug in its class. Last year, Vyvgart generated $1.27 billion in sales. Revenue is expected to hit $1.82 billion this year, growing 43%. Argenx is working to establish its next-generation Vyvgart Hytrulo, an under-the-skin shot for inflammatory diseases. The original Vyvgart is an intravenous infusion.
Chugai's drug — developed with Roche — could have offered patients another option with infrequent, low-volume under-the-skin injections. Now, Chugai's results "should lift a significant overhang and reaffirm Argenx's leadership position in the gMG market," he said.
For Immunovant, the Chugai results remove a potential competitor. But, in the near term, investors will likely focus on a possible rival from Biohaven.
On today's stock market, biotech stocks Argenx and Immunovant popped a respective 11.2% to 396.88 and 4.8% to 33.09. Tourmaline stock plunged 36% to 28.61. Roche shares toppled 4%, hitting 31.32.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
