In an off day across the biotech segment, small-cap pharmaceutical company Idera Pharmaceuticals (IDRA) saw its shares get hammered to the tune of a 25 percent or more loss on Monday. Driving the losses was a negative report from Summer Street Research Partners on Idera’s lead therapy, IMO-8400, that said the drug was unimpressive and expected to fail.
Shares opened at $5.70 apiece, down 6 percent from Friday’s close, but shares started to plunge significantly along with the rest of the market, falling to under $4.70 a share in the first 15 minutes of trading action. The stock made brief recoveries twice only to fall even further each time, hitting lows of $4.51 a share for a loss of more than 25 percent.
IMO-8400 is a DNA-based compound being developed for treatment of B-cell lympyhoma and autoimmune diseases by disrupting the biological process of the disease. From the company’s website:
“The Company’s lead candidate, IMO-8400, has a novel mechanism of action as an antagonist to Toll-like receptors (TLR) 7, 8, and 9. Toll-like receptors are proteins whose activation plays a key role in both autoimmune diseases and forms of B-cell lymphoma where the MYD88 L265P genetic mutation is present, including Waldenström’s macroglobulinemia (WM) and activated B-cell-like diffuse large B-cell lymphoma (ABC-DLBCL). Treatment with IMO-8400 blocks over-activation of these TLRs, and interrupts the processes that lead to disease progression.”
IMO-8400 is currently conducting a 32-patient phase II clinical trial that began in September of last year. Idera is also developing IMO-9200 as its second novel antagonist for treating certain autoimmune diseases and should begin clinical trial in the second half of the year.
Some key technical factors may have influenced the size of Idera’s sell off. Most notably, the stock’s stachostic RSI, a key technical factor, had reached 1.00 on Friday. Any reading above 0.80 is typically viewed as a sign that the stock could be overbought.
It has been a strong year so far for Idera, with the stock trading in an upchannel that had shares up over 30 percent in 2014 prior to Monday’s losses. It was the peak of a one-year period in which Idera had been a 10-bagger, increasing by more than 1,000 percent in that period.
Today’s action saw shares cross both the 20-day and 50-day SMA from above as well as breaking through a rising support level at just over $5 a share that had appeared to bolster the confidence of investors since forming in mid-November.
Editor's note: this article had previously referred to Summer Street Research Partners as Summer Street Capital, a separate and unafilliated company. It has been edited to correct this mistake.