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 the developmental-stage cancer immunotherapy company Advaxis (NASDAQ:ADXS) fell by more than 10% today. Although there isn't a specific catalyst for this drop, it appears to reflect the growing doubts about the company after they were accused of fudging clinical trial results for an ongoing late-stage study and employing stock promoters over a year ago to artificially increase their share price.
Most importantly, Advaxis is said to have overstated the effectiveness of its experimental cancer therapy, ADXS-HPV, in reducing tumor size in patients with recurrent cervical cancer. Initially, the results of the study were reported in absolute (in millimeters) and not relative terms (% change in size), which makes it difficult to gauge the clinical benefit of the therapy.
Management has since updated its corporate presentation containing a graph illustrating the changes in tumor size on a percent basis. .
So what: Advaxis has a long problematic operating history, pot-marked by several massive dilution events that wiped out early shareholders. The stock has seemingly found a second life, though, after the former CEO Thomas Moore stepped down and major players in immuno-oncology such as Merck took an interest in the company's bacteria-based (engineered Listeria monocytogenes) approach to cancer treatment. These recent allegations -- and the market's subsequent reaction -- nevertheless show that the stock will probably remain on the volatile side until the company is able to gain a regulatory approval for one of its clinical candidates.
Now what: Advaxis is undoubtedly taking a novel approach to cancer treatment within the immuno-oncology space. Even so, the use of bacterial vectors to induce immune responses against tumors hasn't exactly produced stunning results so far. In a mid-stage study for ADXS-HPV, for instance, the treatment generated only a 6% response rate and overall survival appeared to be comparable to the use of chemotherapy alone.
Going forward, the company may have more luck with its platform in a combo setting, such as the planned study with Merck's PD-1 inhibitor Keytruda as a potential treatment for advanced prostate cancer. That said, you may want to wait until its bacterial-based therapy progresses further in clinical testing before jumping into this risky stock.
George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.