Please ensure Javascript is enabled for purposes of website accessibility

Why Immunomedics Shares Crashed 13.5% Today

By Todd Campbell - Updated Apr 3, 2020 at 3:15PM

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

A Wall Street downgrade raises concerns its lead pipeline candidate might fail to secure an FDA OK in June.

What happened

After Goldman Sachs (GS 0.84%) cut its rating from a "buy" to a "sell" following reports the Food and Drug Administration (FDA) may have concerns over its manufacturing process, Immunomedics (IMMU) shares tumbled 13.5% at 3:45 pm EST on Friday.

So what

In early 2019, the company was issued an FDA complete response letter rejecting an application for sacituzumab govitecan approval because of manufacturing concerns at the healthcare company. The setback resulted in a C-suite shake-up, a contract with a new manufacturer, and a refiling for approval of the drug in December. 

A man holds his forehead in his hand in front of a declining stock price chart.

IMAGE SOURCE: GETTY IMAGES.

A decision from the FDA is expected in June for sacituzumab govitecan, an anti-TROP-2 antibody drug conjugate addressing heavily pretreated metastatic triple-negative breast cancer (mTNBC). However, Goldman Sachs downgraded the stock by two notches on Friday, based upon an FDA form 483 filing that raised questions yet again about the manufacturing of the drug. Goldman Sachs also reduced its price target for Immunomedics shares to $5 from $24.

The possibility Immunomedics won't be able to address manufacturing concerns prior to the approaching FDA decision date casts doubt on whether the FDA will reject sacituzumab govitecan again. Another failure to secure a regulatory go-ahead for the treatment would be a stark indictment of Immunomedics leadership, and a disappointing result for heavily pretreated breast cancer patients desperate for new treatment options. 

Now what

Late-line treatments for triple negative breast cancer offer limited efficacy, suggesting an important market opportunity for sacituzumab govitecan. In trials, the overall response rate to Immunomedics drug was 31%, significantly better than the mid-teens response rate observed historically in heavily pre-treated patients. Roughly 37,000 Americans alone could potentially benefit from the drug if it's approved, suggesting commercialization could produce hundreds of millions of dollars in annual sales. 

Until the company provides some guidance regarding this matter, investors should expect shares to remain volatile. If Immunomedics is able to address concerns, then risk-tolerant investors might want to consider picking up shares on sale.

Todd Campbell has no position in any of the stocks mentioned. The Motley Fool recommends Immunomedics. 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

Immunomedics, Inc. Stock Quote
Immunomedics, Inc.
IMMU
The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
GS
$334.67 (0.84%) $2.80

*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
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/07/2022.

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.