How you view a stock depends heavily on your point of reference. Bellicum Pharmaceuticals (BLCM), for example, saw its share price fall nearly 14% in one day in late June. That's certainly not great, but it's not disastrous, either.
On the other hand, if you bought the biotech stock back in mid-November of last year, you've suffered through seeing roughly half of your initial investment evaporate. Many investors might view that kind of plunge as catastrophic.
Whenever you bought Bellicum (or if you haven't invested in the biotech but are considering doing so), there's one overriding question: Can the stock bounce back? Here's why the answer is a tentative "yes."
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Anatomy of the decline
The drop in late June stemmed from Bellicum's Securities and Exchange Commission filing stating that it could sell an additional $150 million of stock over a period of time. Publicly traded companies file these types of "shelf registrations" when they're likely to offer more shares via a public offering but want to decide the optimal time to do so. It's not surprising that Bellicum made this move, since the company doesn't have much revenue coming in and is burning through cash.
Bellicum's bigger decline that began last November resulted from a more serious worry. Juno Therapeutics (JUNO) announced on Nov. 23, 2016, that it was placing a clinical hold on studies of experimental leukemia drug JCAR015 after two patients died. A few months later, Juno scrapped its development plans for the drug altogether.
Why did this bad news for another biotech hurt Bellicum? It's using the same basic technology as Juno -- chimeric antigen receptor T-cell (CAR-T) therapy. With CAR-T therapies, patients' T-cells (white blood cells produced in the thymus gland that are key to the body's immune responses) are extracted then genetically modified. The T-cells are then put back in the patients' blood.
Keep in mind, though, that Bellicum didn't report negative developments for its own pipeline. However, the biotech did change CEOs in early 2017 -- the kind of move that doesn't always give investors a warm and fuzzy feeling. Bellicum also announced a stock offering in March that diluted the value of existing shares. In May, the biotech announced another shakeup in its executive ranks, with its COO and head of clinical development leaving.
Image source: Getty Images.
Ingredients of a rebound
Concerns about the safety of products and corporate uncertainty would weigh on any stock. The corporate uncertainty should be fairly easy to resolve if Bellicum's new management team demonstrates competence. For Bellicum to rebound in a major way, though, it must convince investors that its pipeline candidates are likely to succeed -- especially lead candidate BPX-501.
The company hopes to address a big need with BPX-501: overcoming issues with stem cell transplants for patients with blood diseases from partial-match donors. Stem cell transplants from partial-match donors are often T-cell depleted in an attempt to prevent graft-versus-host disease (GVHD). The problem with this is that the lack of T-cells increases the risk of deadly infections.
Bellicum's answer to this problem is to add genetically modified T-cells to the stem cell transplants from partial-match donors. This genetic modification puts a switch in the T-cells that allows another of Bellicum's drugs, rimiducid, to kill the T-cells. BPX-501 essentially allows more T-cells to fight infections, but if GVHD becomes a problem, the toxic T-cells can be wiped out by rimiducid.
This is a pretty cool solution to a longtime issue. So far, results from clinical studies have been quite positive. BPX-501 appears to work as intended with no major safety concerns. So why hasn't Bellicum stock shot up? It's still early -- and some still have questions about how successful BPX-501 will be.
However, I expect that Bellicum will announce results from one of its phase 2 studies of BPX-501 in the near future. Final data for the primary outcome of the other phase 2 study is scheduled to be collected at the end of this year. The results from these two studies could provide the spark that Bellicum needs to bounce back.
