What happened

Shares of Mirati Therapeutics (MRTX) fell more than 20% in the early afternoon on Tuesday. The clinical-stage biotech company focuses on oncology therapies. It saw its shares plunge more than $19 from their closing price on Monday. 

So what

The slump happened after the company announced early results Monday from a phase 2 trial for Adagrasib as a first-line combination therapy to treat non-small cell lung cancer (NSCLC). The trial combined the drug with Merck drug Keytruda (pembrolizumab) to be used on patients with NSCLC with a KRASG12C+ mutation. The point was to see how effective a KRASG12C+ inhibitor (Adagrasib) and a PD-1/L1 checkpoint inhibitor (Keytruda) would be together to fight NSLC.

While the report said the therapy showed a good safety profile and a 49% objective response rate and could be seen as an alternative to chemotherapy, investors and analysts were apparently not impressed. It didn't help their confidence when two of the company's executives sold the company's stock in recent days.

On Nov. 28, Mirati president, founder, and head of research and development Charles Baum sold 69,028 shares of Mirati stock, and on Dec. 5, chief scientific officer Jamie Christensen sold 1,726 shares. 

Now what

The company's stock is down 45% so far this year. The company has been mentioned as a possible takeover target, so long-term investors may still want to hold on to the stock. The company expects to hear by Dec. 14 from the Food and Drug Administration to decide whether to approve Adagrasib as a therapy for previously treated NSCLC patients with the KRASG12C+ mutation.  An FDA approval would make Adagrasib the first head-to-head competitor with Lumakras (sotorasib), made by Amgen and just approved last year.