What happened

Shares of Prometheus Biosciences (RXDX) were down more than 12% this week as of Friday morning, according to data from S&P Global Intelligence.  The clinical-stage biotech company specializes in immunotherapies with a focus on inflammatory bowel disease (IBD).

The stock closed last Friday at $44.73, then opened at $44.50 on Monday. It fell steadily throughout the week and was as low as $37.89 early Friday. Prometheus' stock is down a little more than 2% so far this year.

So what

Prometheus' lead therapy in its pipeline is IBD drug PRA023. The payoff for a successful IBD therapy could be significant, with possibly more than 3 million people in the United States suffering from IBD, according to the Centers for Disease Control, including two IBD conditions, ulcerative colitis and Crohn's disease.

Prometheus didn't announce any news, but Pfizer, one of its primary competitors in IBD therapies, did. The large pharmaceutical is pairing with Roivant to form a new Vant (a type of Roivant subsidiary) to market RVT-3101, which just finished a phase 2b story to treat ulcerative colitis. Pfizer will have a 25% stake in the subsidiary.

Now what

Prometheus' PRA023 is in a phase 2 study for ulcerative colitis, as well as a phase 2 studies to treat Crohn's disease and systemic sclerosis-interstitial lung disease, but Pfizer and Roivant could be surging ahead with their own IBD therapy. As the biotech only reported $968,000 in revenue in the third quarter and an overall loss of $37.3 million in the quarter, it has a lot riding on PRA023.