Kalvista Pharmaceuticals scrapped an experimental hereditary angioedema drug on Tuesday due to safety issues, and the biotech stock tumbled.
In a midstage test, seven out of 33 patients with the swelling disorder developed elevated liver enzymes. Patients had elevated enzymes for two to 12 weeks, though they didn't have any symptoms, Kalvista said in a news release.
On the stock market today, the biotech stock toppled 58.9% to 5.85.
Needham analyst Serge Belanger said the move was an overcorrection. Kalvista is still working on another hereditary angioedema treatment called sebetralstat. Tuesday's news regarding the drug, KVD824, shouldn't have an impact on those efforts, he said in a report.
"We view any downside move in Kalvista shares beyond 30%-35% as an overreaction given that KVD824 was still in the proof-of-concept stage and (sebetralstat), the main and most advanced asset, is unaffected and (the company) remains on track to report Phase 3 results in the second half of 2023," he said.
Biotech Stock Biocryst Jumps On Kalvista Flop
Belanger said the news is a boon for Biocryst Pharmaceuticals, which sells an oral drug called Orladeyo to prevent swelling attacks in hereditary angioedema patients. KVD824 was the most director competitor to Orladeyo, he said.
Biotech stock Biocryst jumped 9.4% near 14, in response.
Kalvista is developing sebetralstat as an on-demand treatment for swelling attacks. The company has already tested sebetralstat in 68 patients in a midstage study. None experienced elevated liver enzymes following treatment, Belanger said.
He expects Kalvista to ask for Food and Drug Administration approval of sebetralstat in 2024, and kept his buy rating on the biotech stock. Belanger lowered his price target to 24 from 38.
Biotech stock Kalvista has a strong Relative Strength Rating of 93. This puts shares in the leading 7% of all stocks in terms of 12-month performance, according to IBD Digital.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
