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Why Adaptimmune Therapeutics Was Sinking This Week

What happened

In an about-face from its impressive performance last week, Adaptimmune Therapeutics (NASDAQ: ADAP) stock declined by nearly 14% over the past five trading days. This occurred even though the cancer-focused biotech actually divulged some good news.

So what

That news was certainly encouraging. On Monday, Adaptimmune said that its phase 1 SURPASS trial gauging the efficacy of its ADP-A2M4CD8 SPEAR T-cell therapy to reduce certain types of solid tumors showed a response rate of 36% and a disease control rate of 86%. One patient with ovarian cancer recorded a complete response to the therapy.

Image source: Getty Images.

"It is no longer a question of whether our SPEAR T-cells are effective against a range of MAGE-A4 expressing tumors -- they undoubtedly are," Adaptimmune quoted CEO Adrian Rawcliffe as saying. "Now, our focus is on turning them into approved therapies."

That's an exciting prospect, but the update couldn't compete with the Sept. 7 announcement that the company had signed a licensing and partnership deal with Genentech (now owned by deep-pocketed international pharmaceutical company Roche). The total value of the deal could top a mouth-watering $3 billion for Adaptimmune when potential milestone payments and royalties are included.

Now what

It seems that numerous investors engaged in profit-taking with their Adaptimmune positions after considering last weekend whether they wanted to sell or hold. This would explain the general five-day slide in the stock price, despite Monday's good news.

But the best returns from investing, particularly in the biotech sector, are rewarded with patience. The fight against cancer is going to be a long and difficult one. Adaptimmune is well equipped for the battle, so investors shouldn't be discouraged by this week's weakness.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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