What happened

Shares of Protagonist Therapeutics (PTGX 5.96%), a clinical-stage biotechnology company, are plummeting today. As of 2:26 p.m. EDT, the stock price has fallen 62.9% in response to news of a clinical hold from the FDA.

So what 

Protagonist Therapeutics is advancing an ambitious pipeline with five new drug candidates in clinical trials right now. Without any approved products to sell, the biotech lost $55 million in the first half of the year. 

Angry investor looking at their stocks.

Image source: Getty Images.

The biotech stock is getting hammered today because investors found out Protagonist's lead candidate, rusfertide, is going to take much longer to reach the market than they were expecting. That's because the FDA placed a clinical hold on the new drug candidate that will halt the dosing of patients in the middle of three different phase 2 trials.

Now what

Rusfertide is a tiny protein that mimics an iron-regulating hormone called hepcidin. People who lack this naturally occurring hormone tend to experience dangerous iron overload.

The FDA applied a clinical hold on rusfertide after Protagonist Therapeutics notified the agency about mice that developed skin cancer after exposure to rusfertide. Protagonist Therapeutics will comb through available data to see if tumorigenicity observed in mice carries over to humans. 

Investors should probably assume the entire rusfertide program is toast. Convincing the FDA an early clinical-stage drug doesn't cause cancer is nearly impossible when the agency doesn't allow a company to run any trials.