Shares of gene therapy biopharma Adverum Biotechnologies (NASDAQ:ADVM) fell almost 16% today after the company announced that CEO Amber Salzman and Dr. Athena Countouriotis, the CMO, will be leaving the company.
The company characterized the CEO's departure as a mutual decision, motivated by the board's desire to have a CEO based out of headquarters in the San Francisco Bay Area. Dr. Salzman had been cross-country commuting from Philadelphia for the last two years, dating back to the merger of her former company, Annapurna Therapeutics, with Avalanche Biotechnologies, which formed Adverum.
It appears Dr. Countouriotis resigned her role as CMO as a result of the shake-up at the top. She played a crucial role in efforts to initiate clinical trials following nearly 12 months of delays.
Interestingly, while most biotech companies have an absence of women as executives, both vacancies will be filled by women. Leone Patterson will take over as interim CEO, while Dr. Linda Neuman will become CMO.
As of 11:28am EDT, the stock had settled to a 14.2% loss.
Uncertainty is about the worst thing that can happen to a stock. Clinical-stage biopharma companies have no shortage of it by the nature of their business, so shaking up the very top of leadership only adds to the list of unknowns facing Adverum Biotechnologies.
The next CEO will take over the helm of an early stage pipeline that includes the drug candidate ADVM-043, which is due to announce initial results from a phase 1/2 trial in the second half of 2018. It's being investigated as a treatment for A1AT deficiency, an inherited condition caused by insufficient supply of a protein that protects the lungs and liver, increasing the risk of developing diseases of those organs. A single dose was shown to improve the condition up to one year out from administration in animal studies, but there's a long way to go to demonstrate the safety and effectiveness in humans.
Adverum Biotechnologies stock has been on a tear in the last year thanks to a rising tide for anything associated with the term "gene therapy." Even with today's double-digit drop, shares are up over 55% since the beginning of 2018. It ended 2017 with $247 million in cash, and although that will be used quickly, its market cap is now around $340 million. That said, while the therapeutic approach is intriguing, it's important to remember that the drug pipeline is in the earliest stages of development. That means this remains a high-risk biopharma stock.