Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Ambit Biosciences (NASDAQ:AMBI) -- a clinical-stage company developing therapies to treat oncology, autoimmune, and inflammatory diseases -- plunged as much as 37% after updating the status of its lead drug, quizartinib, following a meeting with the Food and Drug Administration.
So what: According to the press release, Ambit had hoped to file a new drug application for quizartinib, a treatment for relapsed/refractory acute myeloid leukemia, utilizing phase 2 and 2b data. The FDA, however, would not support this accelerated approval pathway, noting that it does not agree that, "complete remission with incomplete hematological recovery represents a surrogate endpoint reasonably likely to predict clinical benefit." In other words, Ambit will need to run a phase 3 study for quizartinib before it can file for a new drug application.
Now what: This really isn't as horrible as investors are making it out to be today, however it does mean that Ambit will need to run a costly phase 3 trial when there was a 50-50 shot it would be able to avoid this extra step prior to its FDA meeting. On the bright side, Ambit has $78.9 million in cash, which is more than enough to make it through the end of next year even with this added clinical study. I certainly would like to wait for this phase 3 data before suggesting where Ambit could head next, but if my arm were twisted I'd call today's downward action a bit overdone.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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