Seattle Genetics Shares Hammered on Clinical Holds

Seattle Genetics Inc. (NASDAQ: SGEN) did not get a gift from Santa in 2016, or if it did it was a bag of coal. Its shares were down double-digits on the morning of December 27 after the company announced that the U.S. Food and Drug Administration (FDA) has placed holds on several early-stage clinical trials of its leukemia drug candidate.

The reason for the clinical holds was to evaluate the potential risk of hepatotoxicity in patients treated with SGN-CD33A and received allogeneic stem cell transplant either before or after treatment. Six patients were shown to have sustained liver damage, and four patients died.

News like this is more than a surprise for most investors, but it may not have been a shock to at least two analysts on Wall Street. Just on December 12, Seattle Genetics was downgraded to Neutral from Outperform at Credit Suisse. Also, on November 29, Seattle Genetics was downgraded to Equal Weight from Overweight with a $70 price target at Barclays.

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Seattle Genetics said in its December 27 press release that over 300 people had been given the drug. The company said:

The phase 1/2 trial of SGN-CD33A monotherapy in pre- and post-allogeneic transplant AML patients has been placed on full clinical hold. Two phase 1 trials have been placed on partial clinical hold (no new enrollment, existing patients may continue treatment with re-consent). These studies are SGN-CD33A monotherapy, including a subset of older AML patients in combination with hypomethylating agents, and SGN-CD33A combination treatment with 7+3 chemotherapy in newly diagnosed younger AML patients. No new studies will be initiated until the clinical holds are lifted.

Seattle Genetics’ other ongoing trials of SGN-CD33A, including the phase 3 CASCADE trial in older AML patients and phase 1/2 trial in myelodysplastic syndrome, are proceeding with enrollment.

Seattle Genetics shares were up almost 2% at $61.86 last Friday, but the shares were last indicated down almost 16% at $52.04 on Tuesday morning. The stock has a 52-week trading range of $26.02 to $75.36.

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