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Why AC Immune SA Is Imploding

By Brian Feroldi - Updated Apr 24, 2019 at 9:57PM

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Shares crater after the company provides investors with terrible clinical news.

What happened

Shares of AC Immune ( ACIU -3.39% ), a clinical-stage biopharma focused on neurodegenerative diseases, are being annihilated today. The stock is down 66% as of 9:55 a.m. EST on Wednesday after the company announced that two important phase 3 trials are being discontinued.

So what

AC Immune's collaboration partner Roche Holdings ( RHHBY -0.33% ) announced today that it is discontinuing the CREAD 1 and CREAD 2 studies. These phase 3 trials were testing AC Immune's drug crenezumab as a potential treatment for Alzheimer's disease.

The decision to stop the trial was made after an interim analysis by a third party showed that crenezumab was unlikely to meet the study's primary endpoint. 

Arrow pointing up and down with question mark

Image source: Getty Images.

AC Immune's CEO, Andrea Pfeifer, stated, "We are extremely disappointed about the outcome of the Phase III CREAD 1 interim analysis and we also would like to thank patients and caregivers for their participation."

Pfeifer stated that she remains "optimistic" about the drug's future as the company awaits the outcomes of its Colombian API study.

Traders are thrashing the company's stock in response to the disappointing news.

Now what

Crenezumab is AC Immune's most advanced pipeline compound, so this clinical update deals a big blow to the bull case for owning AC Immune's stock. Thankfully, AC Immune also has a number of other compounds in various stages of development, so crenezumab isn't the company's only potential shot on goal.

Still, this clinical news represents a huge step backward for the business. That's why I do not consider today's massive drop to be a buying opportunity.

Check out all our earnings call transcripts.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

AC Immune SA Stock Quote
AC Immune SA
ACIU
$4.85 (-3.39%) $0.17
Roche Holding AG Stock Quote
Roche Holding AG
RHHBY
$49.35 (-0.33%) $0.17

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