Investors seem to have lost their conviction in the stock market lately, as even brief attempts to rebound from declines have met with stiff resistance. For instance, Monday's trading session gave market participants some optimism about how the economy could weather difficult times, but based on Tuesday morning's stock index futures movements, it's just difficult to build lasting positive momentum. Based on current futures levels, stocks looked poised to give back much of Monday's gains at the open on Tuesday morning.
However, there was a pair of noteworthy biotech stocks that were bucking the downtrend and moved sharply higher. Both Immunovant (IMVT -2.09%) and Roivant Sciences (ROIV 1.38%) are relatively small players in biotech right now, but the latest news on one candidate treatment had investors feeling better about their long-term prospects. You'll find all the details below.
Immunovant gets a big win
Shares of Immunovant soared 60% in premarket trading on Tuesday morning. The immunology specialist reported results from an early clinical trial that included encouraging data about a key treatment's potential for helping to treat a wide variety of autoimmune diseases.
Immunovant's phase 1 trial sought to study its IMVT-1402 candidate treatment to see if it would produce reductions in the immunoglobulin G (IgG) levels of participating healthy adults. The trial showed that IMVT-1402 didn't produce any adverse changes in serum albumin or LDL-C levels, supporting the treatment's safety and efficacy.
As CEO Pete Salzmann noted, the results are a key step forward, as they are the first results using human subjects. The results confirmed studies in nonhuman primates, and the company is moving forward with the trial in anticipation of sharing more data by November.
There are a large number of autoimmune diseases for which there aren't good treatments available. Immunovant hopes that IMVT-1402 will be able to help patients suffering from these diseases, and if it can keep producing solid trial data like this, then Immunovant's stock could continue to get positive attention from investors as it has since late last year.
Roivant rides Immunovant's coattails
Shares of Roivant Sciences, meanwhile, climbed 15%. The move came as a result of Immunovant's success, given the link between the two companies.
Roivant's history with Immunovant goes way back. At one point, Immunovant was a wholly owned subsidiary of Roivant, but Immunovant went public in a merger with a special purpose acquisition company (SPAC) in 2019. Roivant held onto a substantial stake in the company, though, and after Roivant itself went public through a different SPAC merger, there was speculation in 2021 that Roivant might choose simply to reacquire Immunovant in full when its stock price dropped.
Instead, Roivant chose simply to make a further investment in Immunovant, with the deal focused on the prospects for what was then IMVT-1401. The terms of the deal involved Roivant investing $200 million, which Immunovant used to further clinical trials for the candidate treatment. In exchange, Roivant received 17.02 million shares of Immunovant common stock, working out to a price of $11.75 per share.
The biotech industry has seen some turbulence over the past couple of years. However, promising treatments continue to move through development pipelines. When successful results emerge, investors can expect to see gains like the ones that Roivant and Immunovant are giving their shareholders right now.