Please ensure Javascript is enabled for purposes of website accessibility

Why PTC Therapeutics Stock Is Plummeting Today

By George Budwell - Feb 6, 2020 at 10:32AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors are showing their displeasure with the biotech's latest clinical update.

What happened

Shares of mid-cap rare disease drugmaker PTC Therapeutics (PTCT -0.60%) fell by as much as 12.3% in early morning action today. The biotech's stock is responding poorly to the latest clinical update for the experimental spinal muscular atrophy (SMA) treatment risdiplam. Roche is presently developing the orally administered therapy under a licensing agreement with PTC Therapeutics.

Although risdiplam fared well in terms of its overall efficacy, investors are apparently concerned about some of the adverse effects observed in the trial. Specifically, PTC reported that upper respiratory tract infections, nasopharyngitis, pyrexia, headache, diarrhea, vomiting, and cough were all observed in patients treated with risdiplam. The company was quick to point out, however, that the adverse event profile was similar to placebo.

As of 10:34 a.m. EST, PTC Therapeutics' shares were still down by 8.2%.  

Chalkboard chart showing a declining trend line.

Image source: Getty Images.

So what

Why are investors running for the hills? The main issue is that risdiplam will be entering a jam-packed market. Biogen and Novartis both have top-notch SMA treatments, after all. So PTC Therapeutics and Roche arguably need a fairly clean safety profile for their competing SMA offering in order to gain market share. The good news is that investors do seem to be overreacting to this clinical update. None of these adverse events appear to be a dealbreaker, and as the only oral SMA therapy, risdiplam should be able to carve out a profitable niche.  

Now what

The drug is currently under priority review with the Food and Drug Administration, with an action date set for this coming May. As there's nothing overly concerning in this latest clinical data, it might be a good idea to pick up some shares of PTC Therapeutics on this dip.

George Budwell has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Biogen. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

PTC Therapeutics, Inc. Stock Quote
PTC Therapeutics, Inc.
PTCT
$51.55 (-0.60%) $0.31

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
402%
 
S&P 500 Returns
129%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.