Biotech stock Pharvaris plummeted Monday after the Food and Drug Administration placed a pair of its clinical studies on hold.
The company is testing a pill for hereditary angioedema. In this rare disease, fluid accumulates outside the blood vessels, leading to rapid swelling in some tissues. Pharvaris is also evaluating an extended-release medicine that could prevent angioedema attacks.
In response to the FDA's news, Pharvaris shares crashed 34.3% to 12.14. The biotech stock touched its lowest-ever point on today's stock market.
The FDA based its move on a review of nonclinical data, Pharvaris said in a news release. The decision means Pharvaris will have to stop both studies in the U.S.
"We are fully committed to working closely with the FDA to address the agency's concerns," Chief Executive Berndt Modig said in a written statement. "Pharvaris remains dedicated to providing new therapeutic options for the treatment of hereditary angioedema and is working diligently to bring (the drug called) PHA121 to people living with hereditary angioedema."
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Biotech Stock Keeps Outperform Rating
SVB Securities analyst Joseph Schwartz kept his outperform rating on the biotech stock. He noted PHA121 has a similar mechanism as Takeda Pharmaceutical's Firazyr. Firazyr's label warns against the risk of laryngeal attacks — throat swelling — following treatment.
"Management noted that they have not seen any Firazyr-related toxicities in their work and have not heard any concerns about the mechanism itself," Schwartz said in a report to clients. "Furthermore, six- and nine-month toxicity studies were completed and submitted some time ago."
The company is submitting data to the FDA on a continuous basis so "it is difficult to know what triggered the hold," he added.
Schwartz noted the situation is similar to the FDA's hold on KalVista Pharmaceuticals' study in the same disease. In that case, the FDA lifted the hold after about four months. So Schwartz kept his 45 price target on the biotech stock.
Shares Locked In A Downtrend
Pharvaris stock went public in February 2021. Shares largely trended down since this June. Still, the biotech stock held a Relative Strength Rating of 87 out of a best-possible 99, according to IBD Digital. This puts Pharvaris stock in the leading 13% of all stocks in terms of 12-month performance.
The FDA news sent shares tumbling below their 200-day moving average, MarketSmith.com shows.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
