What happened
Shares of ChemoCentryx (CCXI) suffered an ugly 79% plunge in May, according to data provided by S&P Global Market Intelligence, after a Food and Drug Administration advisory committee offered up a split opinion on the efficacy of avacopan, the biotech's treatment for antineutrophil cytoplasmic autoantibody (ANCA)-associated vasculitis (AAV).
So what
The panel generally leaned in favor of the treatment, voting 10-8 in support of avacopan's safety profile and its benefit-risk profile in treating adult AAV patients, but it split 9-9 on whether the efficacy data supported approving avacopan for treating them.
Image source: Getty Images.
While that means there's still hope avacopan can get full FDA approval, the hesitancy suggests the committee harbors doubts that could be a hurdle too high to climb.
Although the FDA isn't required to follow the committee's advice, it tends not to stray too far too often. Investors don't think it will this time, either.
Now what
The FDA is supposed to decide on avacopan by July 7.
That puts an investment in ChemoCentryx into limbo for a month, though don't expect too much. Wall Street has moved to the sidelines and downgraded the stock while lowering price targets, sometimes dramatically so.
For example, H.C. Wainwright analyst Edward White slashed his price target from $101 per share to $28 per share, though he does maintain his buy rating. Analysts in general, though, have gone from being very bullish on ChemoCentryx and avacopan's potential, to very pessimistic.
Raymond James' Steven Seedhouse is one who is doubtful it will actually happen now because of the split votes, but says should avacopan somehow manage to get approved he believes it could become a blockbuster drug for ChemoCentryx.
He downgraded the stock to outperform from strong buy and cut his price target to $51 per share from $120 per share, indicating he's wary, but not fully giving up. Still, putting money into ChemoCentryx now seems more like a gamble than an investment.
It doesn't mean the end of ChemoCentryx or avacopan, of course, as the biotech stock can adjust and refile, but it would be dead money for some time to come.
