Athersys (ATHX) Shares Down by One Half On Failed Clinical Trial

Joel Anderson  |

Shares in clinical-stage biotechnology company Athersys (ATHX) plunged over 55 percent on Monday following the release of clinical data from its clinical study using the company’s MultiStem cell therapy to treat ulcerative colitis (UC).

Shares have been trading with heavy volume, clearing 9 million shares before 12:30 pm ET despite an average daily volume of just 1.02 million, but relatively little volatility aside from gapping down 53.5 percent to $1.27 a share at the opening bell. Shares have since slid, falling as far as $1.08 a share, but trading closer to $1.20 headed into the early afternoon.

The catalyst for the loss came from the release of the Phase II data that showed no benefit to patients suffering from chronic or mild-to-severe UC, also known as inflammatory bowel disease. From the company’s press release:

“The study results demonstrate favorable safety and tolerability for MultiStem through 8 weeks following treatment. However, the cell therapy failed to show meaningful benefit, following a single administration, in patients suffering from chronic, moderate-to-severe UC who have failed other therapies.”

The study did demonstrate a favorable safety profile for the treatment, but the lack of results had shareholders for Athersys reeling.

"These results confirm the consistent safety profile Athersys has seen in previous clinical studies involving MultiStem," said Chairman and CEO Dr. Gil Van Bokkelen. "This study was focused on a challenging patient population with chronic disease - ulcerative colitis patients who have become resistant, intolerant or unresponsive to other therapies. These interim results tell us a single administration of MultiStem in this patient group, while safe, was not sufficient to have a meaningful clinical effect. Obviously, we are disappointed by the efficacy results. We anticipate additional data from the study over time from patients who have received further treatment, which may provide more insight into the factors at work and the potential relevance for MultiStem in this area."

UC is just one of the diseases that Athersys is attempting to treat with its MultiStem technology which its website describes as “a patented, adult-derived ‘off-the-shelf’ stem cell product platform, for multiple disease indications in the areas of inflammatory and immune, neurological, and cardiovascular disease.” The technology is also currently in Phase II trials for treating ischemic stroke, as well.

Small-cap Athersys was soaring earlier this year, gaining almost 75 percent from the start of the year to a two-year high at $4.33 apiece in early January. However, since then, the stock has been in a firm downtrend, gradually losing value over the coming months. The stock crossed its 20-day SMA from above in late February and has stayed below that level, with the 20-day SMA line appearing to act as a resistance level. The 20-day SMA also crossed the 50-day SMA from above in mid-March.

However, prior to today’s news, the stock had also displayed a downward sloping support line that had reached about $2.50 a share. But the results of the clinical trial rendered these technical factors a moot point on Monday, as such catalysts are wont to do. The stock had previously been showing signs of being oversold, with its 14-day RSI staying below 50.0 for over a month and dropping below 30.0 twice since late March. Today’s news, however, may mean that Athersys will continue trading in oversold territory for a while longer yet.

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