What happened

After Goldman Sachs (GS 0.97%) 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.


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.