What happened

Shares of clinical-stage biopharma Idera Pharmaceuticals (NASDAQ:IDRA) dropped over 15% today after the company announced data from an ongoing phase 1/2 study evaluating one of its immunotherapy drug candidates. The drug candidate, tilsotolimod, was studied as a stand-alone treatment and in combination with Yervoy from Bristol-Myers Squibb in refractory metastatic melanoma. 

The data weren't actually that bad, despite what the sudden drop in share price might indicate. In fact, it seems investors might have realized that after having had their coffee. As of 1:30 p.m. EDT, the stock had settled to a 6% loss.

A chart drawn on a chalkboard showing a negative slope.

Image source: Getty Images.

So what

The phase 1/2 study focused on patients that had already received Keytruda from Merck, but had cancers that developed resistance to the therapy. Idera Pharmaceuticals reported that the combination of its drug candidate with Yervoy delivered an overall response rate of 38% in those patients, compared to just 13% for those taking Yervoy alone. That hints that tilsotolimod could make current biologic drugs more effective at treating tumors that don't respond to anti PD-1 therapies such as Keytruda.

Investors will learn more in the next two years or so from two trials. First, the current phase 2 trial is expected to reach full enrollment of up to 60 patients by the end of 2018. The data presented today include 26 total patients and just 21 evaluable patients, so there will be a more than doubling of the patient population.

Second, Idera Pharmaceuticals initiated a pivotal phase 3 trial in the first quarter of 2018 to evaluate tilsotolimod's ability to treat refractory melanoma, both as a stand-alone treatment and in combination with Yervoy.

Now what

Idera Pharmaceuticals has a relatively large pipeline, but has yet to commercialize a drug candidate capable of providing returns on investment for shareholders. That explains why the stock has been awful to investors over the years. So although it finally might have a promising drug candidate in late-stage trials, investors have been burned too many times before to get too excited about results from a phase 1/2 trial.