Shares of the next-generation cell therapy company Atara Biotherapeutics (ATRA 1.35%) are getting hammered today. Specifically, the clinical-stage biotech's stock was down by an unsightly 54% as of 3:36 p.m. ET Wednesday.
What's weighing on Atara's share price today? Prior to Wednesday's opening bell, Atara announced that the closely watched multiple sclerosis candidate, known as ATA188, will continue its ongoing phase 2 trial without any changes.
While this clinical update isn't necessarily bad news, some investors were clearly hoping that this interim status check would provide definitive proof that the therapy was on the right track. Underscoring this point, Atara's shares were up by an eye-popping 65% over the prior 30 days of trading leading into today's update.
What's the big deal? Atara's shareholders will now have to wait for ATA188 to complete this ongoing mid-stage trial to learn if the therapy is worthy of a late-stage study -- an event slated for October of 2023. That's not great news as the biotech's cash runway currently stands at less than two full years.
What's important to understand is that an overwhelmingly positive interim readout probably would have led to a lucrative partnering deal. Multiple sclerosis, after all, is on track to grow into a staggering $33 billion drug market by the end of the decade.
Is this falling knife worth catching? Atara's stock could eventually rebound. But with a possible capital raise in play following today's underwhelming clinical update, investors might want to stick to the sidelines for now.