Why Adaptimmune Therapeutics' Stock Got Hammered in July

Small-cap biopharma Adaptimmune Therapeutics saw its stock sink in July. Is this speculative pharma now a good long-term buy?

George Budwell
George Budwell
Aug 7, 2015 at 10:09AM
Health Care

ADAP Chart

Editor's Note: This article has been corrected to remove mention of Adaptimmune's short interest, which was significantly overstated in the article. The Fool regrets the error.

What: Shares of Adaptimmune Therapeutics (NASDAQ: ADAP), a clinical-stage biopharma, fell by over 14% in July. Last May, Adaptimmune became the latest publicly-traded immuno-oncology company, hoping its genetically modified T-cells, or TCRs, based therapeutic platform would interest investors.. 

So what: Adaptimmune is entering an increasingly competitive space -- namely modified T-cells aimed at solid tumors and blood-based cancers. The market clearly believes that Juno Therapeutics and Kite Pharma are going to steal the show in this therapeutic area, and late-comers like Adaptimmune will be relegated to picking up the crumbs. 

Now what: This small-cap biopharma's lead product candidate is an affinity-enhanced TCR therapeutic that targets the NY-ESO cancer antigen. The interesting part is that it has demonstrated a treatment effect in early stage studies for both solid tumors and blood-based malignancies -- unlike some of its contemporaries in the enhanced T-cell space. GlaxoSmithKline has also thrown its weight behind Adaptimmunelicensing its flagship clinical candidate in 2014 in an effort to develop it as a game-changing treatment for a wide range of cancers. 

Nevertheless, this stock, as a small-cap biotech, is definitely not for the faint of heart.

All told, Adaptimmune is worth a deeper look by risk-tolerant investors looking perhaps for a contrarian buy, especially in light of the impressive initial results for its therapeutic platform. But the stock's monstrous short interest also shouldn't be taken lightly. With such a high short interest, it may struggle to push higher, even in the wake of positive clinical developments.