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Why Selecta Biosciences Tumbled 34% Today

What happened

After the company reported its gout drug, SEL-212, failed to meet its primary endpoint in a mid-stage clinical trial, shares in Selecta Biosciences (NASDAQ: SELB) traded 33.5% lower on Thursday.

So what

The biotech stock licensed SEL-212 -- a combination of Selecta's synthetic vaccine particles encapsulating rapamycin and pegadricase -- to Swedish Orphan Biovitrum (OTC: BIOVF), or Sobi, earlier this year.


Unfortunately, a phase 2 study evaluating SEL-212 head-to-head against Horizon Therapeutics' (NASDAQ: HZNP) Krystexxa in chronic refractory gout patients missed its mark. A numerically higher response rate was observed over the six-month period. However, the difference didn't meet the threshold of statistical superiority.

Now what

Although the trial didn't pan out, management remains optimistic, claiming numerical superiority supports phase 3 trials because the comparison in those studies is a placebo rather than Krystexxa. If the trials succeed, then SEL-212's monthly dosing could make it an interesting alternative to Krystexxa, which is dosed twice monthly.

Nevertheless, investors might want to be cautious. There's no guarantee phase 3 trials will pan out, and data from those trials isn't expected until 2022. Additionally, even if the studies succeed, there's no guarantee SEL-212 can win market share away from Krystexxa, given its lackluster phase 2 results.

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Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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