Stocks rose in the first hour of the session today but lost ground steadily after that. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) both had significant losses.

Today's stock market

Index Percentage Change Point Change
Dow (0.68%) (165.52)
S&P 500 (0.86%) (23.43)

Data source: Yahoo! Finance.

Technology was the weakest sector, with biotech and semiconductor stocks in particular having a tough day. The SPDR S&P Biotech ETF (NYSEMKT:XBI) tumbled 3.2% and the iShares PHLX Semiconductor ETF (NASDAQ:SOXX) lost 2.4%.

As for individual stocks, Conagra Brands (NYSE:CAG) announced it is acquiring Pinnacle Foods (NYSE: PF), and Cara Therapeutics (NASDAQ:CARA) reported positive clinical trial results for its lead drug.

Collage of falling stock graphs.

Image source: Getty Images.

Conagra aims to boost frozen food offerings through Pinnacle Foods acquisiton

Conagra Brands announced it is acquiring Pinnacle Foods in a cash and stock transaction worth $10.9 billion, including the latter's debt. The owner of brands such as Healthy Choice, Marie Callender's, and Hunt's will be beefing up its frozen food offerings with Pinnacle's Hungry-Man and Birds Eye, and also picking up brands like Duncan Hines, Wish-Bone, and Earth Balance. Investors were not too impressed, sending shares of Pinnacle down 4.3% to $64.97 and those of Conagra down 7.3%.

Under the terms of the acquisition, Pinnacle shareholders will receive $43.11 in cash per share and 0.6494 shares of Conagra, valuing Pinnacle stock at $66.11 as of the close today. The purchase will be funded by $3 billion in new shares of Conagra, plus $7.3 billion in debt and $600 million in divestitures and other sources.

Conagra also announced fourth-quarter results that beat expectations. Sales grew 5.6% to $1.97 billion and adjusted earnings per share increased 35.1% to $0.50. Analysts were expecting the company to earn $0.44 on sales of $1.93 billion.

Frozen food led Pinnacle's growth last quarter, with a sales gain of 7.5%. Reports had surfaced that activist investor Jana Partners, which also has a relationship with Conagra, had been pressuring Pinnacle to sell. Conagra expects the deal, its latest move in an ongoing corporate makeover, to increase adjusted EPS in the low single digits in the fiscal year ending May 2020 and in the high single digits in the year ending May 2022, but investors were perhaps concerned about the high price tag.

Cara Therapeutics announces successful pain trial

Shares of biotech Cara Therapeutics soared 9.9% after the company released positive results for its lead drug, CR845, in a trial for post-operative pain. The trial showed that the drug relieved pain while also significantly reducing nausea and vomiting in the 24 hours after surgery.

The phase 2/3 trial of 444 patients who underwent abdominal surgery for either hernia or hysterectomy tested two doses of CR845, or Korsuva, against a placebo. The higher dose in the dose-ranging study achieved the primary endpoint of pain reduction with a p-value of 0.032, where a score below 0.05 is considered statistically significant. The drug also reduced the incidence of vomiting by 73.3%, significantly reduced post-operative nausea and vomiting impact scores, and increased the number of patients who didn't take anti-emetic medicine from 56% with placebo to 81% with the higher dose of CR845. Use of rescue medication for pain was reduced, but not with statistical significance.

From here, Cara Therapeutics will consult with the FDA on the next steps for getting approval for CR845, which will involve another clinical trial. The company is focusing on indications for pruritis instead of pain, and said in the conference call that it will continue to do so and will probably seek a partner to advance the drug for pain indications.

Cara stumbled last year when a trial of oral CR845 for chronic pain failed, but today's results put a pain indication back in the discussion, and investors cheered the development.