Aerovate Therapeutics said Monday its experimental blood pressure medicine failed in Phase 2 testing, and the biotech stock — which had been on an eight-day sprint — plummeted 93%.
Wedbush analyst Laura Chico slashed her price target on Aerovate stock to 3 from 41, calling the results a "worst-case scenario" for the company. Aerovate had been testing a treatment for pulmonary arterial hypertension, a form of high blood pressure in the lungs. But all three doses in testing missed their mark.
"Given that (the drug called) AV-101 is the company's sole product, we anticipate shares will trade down to cash levels as management explores next steps," she said in a report.
On today's stock market, the biotech stock crashed 93.3% to 1.65, wiping out of nearly all of its value. On Friday, Aerovate stock closed with a market cap of roughly $709 million. Today, it's hovering around $47.5 million, according to MarketSurge.
Biotech Stock Opens At Record Low
Aerovate tested three doses of its dry powder for patients with PAH. Though patients tolerated AV-101, it didn't make a difference in pulmonary vascular resistance compared to a placebo. Patients given the experimental medicine also didn't show any improvement on secondary measures, including how far they could walk in six minutes.
Based on these results, Aerovate says it's halting enrollment and shutting down the Phase 3 portion of the study, as well as a long-term extension study.
Previously, Wedbush's Chico said Aerovate had a good chance to succeed.
"The data clearly demonstrates we were wrong," she said.
She downgraded the biotech stock to a neutral rating from outperform.
Aerovate stock has a promising IBD Digital Relative Strength Rating of 92 out of a best-possible 99. This means shares have performed in the top 8% of all stocks over the last 12 months. The biotech stock had risen almost 51% from June 5 through the close on Friday.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
