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Why Adaptimmune Therapeutics Stock Sank and Then Quickly Rebounded Today

By George Budwell – Jun 1, 2020 at 11:51AM

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Adaptimmune prudently decided to take advantage of its soaring share price to raise capital.

What happened

Shares of the clinical-stage biotech Adaptimmune Therapeutics (ADAP -7.50%) fell by as much as 11% immediately out of the gate Monday morning. The drugmaker's stock kicked off the week off on a sour note thanks to a fairly large public offering consisting of 12.5 million of its American depositary shares.

However, Adaptimmune has sharply rebounded as today's trading session has unfolded: As of 11:44 a.m. EDT, the biotech's stock is currently up by 19%.  

A paper plane illustrating a negative trend turning positive.

Image source: Getty Images.

So what

Last Friday, Adaptimmune's shares rocketed higher on the heels of a positive clinical update for its experimental T-cell therapy platform, which was presented at the American Society for Clinical Oncology (ASCO) Annual Meeting. Most importantly, the company noted that its lead asset, ADP-A2M4, produced a 50% response rate in an early stage trial in patients with synovial sarcoma.

So with its shares heating up in a big way last week, it's not exactly surprising to see the company pull the trigger on a public offering to raise capital. Adaptimmune, after all, is still over a year away from potentially launching its first product.  

Now what

Is Adaptimmune's stock still a strong buy? At present, its market cap stands at roughly $1.56 billion. That's not exactly an outlandish valuation for a company that may have multiple anticancer cell therapies on the market by the middle of the decade. So if you're on the hunt for a top-notch growth opportunity and don't mind the risk that comes with a speculative biotech stock, Adaptimmune may indeed be worth adding to your portfolio.

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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