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Here's Why AbbVie Inc. Fell 18.3% in March

By Cory Renauer – Updated Apr 8, 2018 at 4:27PM

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A pricey misstep shook investor confidence last month.

What happened

Shares of AbbVie Inc. (ABBV -1.29%), a big U.S. pharma, dropped 18.3% in March, according to data from S&P Global Market Intelligence. A high-profile lung cancer candidate missed the mark during an important trial.

So what 

Rova-T was the early clinical-stage asset that inspired AbbVie to pay a stunning $5.8 billion for Stemcentryx just two years ago. To justify the splurge, AbbVie pointed to a 44% response rate among a group of advanced stage small cell lung cancer patients with tumors that express Rova-T's target. AbbVie also pointed to a chance to apply for accelerated approval and become the first available treatment for these patients after they failed two previous courses of therapy.

Sad man losing money.

Image source: Getty Images.

The market shaved around $23 billion from AbbVie's market cap on the day the company announced it wouldn't be seeking an accelerated approval for Rova-T in the third-line setting. AbbVie's expensive experimental drug helped shrink tumors for just 16% of patients during the mid-stage Trinity study.

Now what

It might not be game over for Rova-T but it seems unlikely that AbbVie will realize a positive return on its investment. That said, it looks like the market-beating has gone a bit too far. The company's market cap has fallen around $36 billion since the announcement. 

Seeing ordinary results from a $5.8 billion gamble is enough to shake anyone's confidence, but don't let the Rova-T upset convince you that the rest of AbbVie's pipeline is on shaky ground. In fact, there are at least three late-stage candidates with blockbuster potential getting close to the finish line.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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