Top-notch biotech stock Avidity Biosciences tumbled Monday despite unveiling "positive" midstage test results for its muscular dystrophy treatment.
Avidity tested its drug in patients with myotonic dystrophy type 1, a form of muscular dystrophy in which patients can't relax their muscles at will. Long-term data suggest Avidity's treatment, dubbed delpacibart etedesiran, helped reverse disease progression, Avidity said in a news release. Patients showed improvements across multiple measures of disease severity.
"We think the most important take-away from this readout is that Avidity has reached regulatory agreement on the Phase 3 (study called) Harbor design and will be able to initiate earlier than expected," Leerink Partners analyst Joseph Schwartz in a report.
But Avidity stock 6.2% to 18.86 on today's stock market. This was the steepest dive of any biotech stock trading above 10, according to MarketSurge.com. Avidity stock bottomed out at 4.83 in October and, as of Friday's close, had reversed that for a 316% gain.
Shares have a strong IBD Digital Relative Strength Rating of 98, a measure of 12-month performance. On this metric, biotech stock Avidity ranks in the top 2% of all stocks.
Biotech Stock Tied To 12 Patients
Avidity tested disease severity on several measures. One test examined how fast patients could open their hands after making a handgrip for five seconds. Others included muscle strength and activities of daily living compared with their natural history.
Avidity also said it will use the same measurements in a Phase 3 study which it now plans to begin in the second quarter, vs. earlier expectations for mid-2024.
The company said 12 patients showed improvements on these measures. The study involved 37 patients, but Avidity didn't unveil results for the full group. All 37 are still receiving treatment in an open-label expansion study. This means there are no placebo recipients. All patients are knowingly receiving the experimental drug.
Safety lined up with earlier results released in October, Leerink's Schwartz said. The most common side effects were nausea and headache. This bodes well Avidity after the Food and Drug Administration placed its study on a partial clinical hold in September 2022. One patient experienced a rare, serious side effect in the study. Last May, the FDA allowed Avidity to begin enrolling new patients.
He kept his outperform rating on the biotech stock.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
