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Why Adaptimmune Therapeutics Stock Sank in the First Half of 2021

What happened

Shares of Adaptimmune Therapeutics (NASDAQ: ADAP), a small-cap cancer immunotherapy company, slid by a hefty 21% during the first six months of 2021, according to data from S&P Global Market Intelligence. By contrast, the biotech's shares were among the hottest in the entire healthcare sector last year, with Adaptimmune's stock closing 2020 up by a whopping 349%.

So what

What changed this year compared to 2020? Fortunately, Adaptimmune's clinical pipeline didn't experience any catastrophic setbacks this year. That's the good news. The bad news is that some biotech investors still aren't happy about two interrelated issues.

Image source: Getty Images.

First, Adaptimmune's SPEAR (Specific Peptide Enhanced Affinity Receptor) platform won't produce its first regulatory filing until 2022. Specifically, the company's experimental treatment for advanced synovial sarcoma, afamitresgene autoleucel, is slated to enter the regulatory review stage of its lifecycle next year. While a forthcoming regulatory filing is actually great news for long-term shareholders, biotech stock prices are often subject to the whims of short-term traders and speculators alike. In other words, it would appear that a fair number of the company's 2020 stakeholders have since moved on in search of more profitable near-term opportunities.

Second, one of the main reasons Adaptimmune's shares took flight last year was the notion that the company's unique solid tumor platform would attract a buyer soon. Even though the biotech's partner GlaxoSmithKline -- along with several other big pharmas -- could definitely use a novel anti-cancer platform like Adaptimmune's, a buyout has yet to materialize. In fact, there haven't even been any legit takeover rumors regarding Adaptimmune in several months at this point. As a result, the biotech's shares have lost their appeal this year.

Now what

Should bargain hunters take advantage of Adaptimmune's poor showing in 2021? If you are the patient type and don't mind an elevated risk profile, this small-cap biotech may indeed be worth checking out during this quiet period.

The lowdown is that Adaptimmune's pipeline is rapidly expanding into more lucrative indications and the company could morph into a commercial operation as soon as next year. As such, this beaten-down biotech stock could double -- or even triple -- in value over the next 12 months or so.

On the flip side, adoptive cell therapy for solid tumors has proven to be a tough area to make a living in biotech. Adaptimmune's stock, therefore, does come with a heavy dose of risk -- a fact that growth-oriented investors shouldn't overlook in their quest for potential hidden gems.

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George Budwell has no position in any of the stocks mentioned. The Motley Fool recommends GlaxoSmithKline. The Motley Fool has a disclosure policy.


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