What happened

Shares of Blueprint Medicines (NASDAQ:BPMC) fell nearly 21% today after the company announced that its lead drug candidate, avapritinib, failed an important late-stage study in gastrointestinal stromal tumors (GIST). The experimental therapy didn't lead to an improvement in progression-free survival (PFS) compared to regorafenib in patients with third- or fourth-line GIST, meaning they had received two or three other treatments prior to the study.

The disappointing results might settle the debate among investors over which company is better positioned to succeed in GIST: Blueprint Medicines or Deciphera Pharmaceuticals (NASDAQ:DCPH). The former has earned a narrow regulatory approval for a specific genetic mutation in GIST, but the latter has generated encouraging results in second-, third-, and fourth-line GIST.

As of 10:58 a.m. EDT, the pharma stock had settled to a 17.2% loss.

A scientist in the lab with a disappointed look on his face.

Image source: Getty Images.

So what

In the phase 3 trial conducted by Blueprint Medicines, 240 individuals received avapritinib and 236 individuals received regorafenib, which is approved as a third-line GIST treatment. The experimental therapy achieved a median PFS of 4.2 months, while the standard treatment achieved a median PFS of 5.6 months. The difference wasn't considered statistically significant.

The top-line results suggest avapritinib might not be competitive as a second-line treatment option, for which Blueprint Medicines is currently conducting clinical trials. While a second-line GIST drug would have a larger market opportunity than later-line treatments, the bar for success is also higher. Sunitinib, the standard treatment for second-line GIST, achieved a median PFS of 5.6 months in registrational trials.

It might not matter in the long run. Ripretinib, the lead drug candidate from Deciphera Pharmaceuticals, achieved a median PFS of 6.3 months in a clinical trial testing its potential in fourth-line or greater GIST. It achieved a median PFS of 10.6 months as a second-line GIST treatment in a small phase 1 study.

Now what

On the one hand, today's news is disappointing for investors. Blueprint Medicines was positioned to offer next-generation therapies for underserved patients with GIST. That ambitious vision just took a hit, especially once promising results from Deciphera Pharmaceuticals are factored into the competitive landscape.

On the other hand, Blueprint Medicines isn't completely dependent on avapritinib. The company is developing several other assets aimed at genetically defined cancers in research and clinical programs. The business also reported $548 million in cash at the end of 2019, which management believes is enough to fund operations into 2022.

That said, a market cap of $3.1 billion prices in a lot of success that has yet to materialize. Investors should consider this a high-risk stock.

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.