FDA Holds Allogene’s AlloCAR T Clinical Trials; Shares Crash 33%


Shares of Allogene Therapeutics, Inc. (ALLO) plunged 32.73% in the extended trading session on Thursday after the U.S. Food and Drug Administration (FDA) ordered to hold the clinical-stage biotechnology company’s AlloCAR T clinical trials. Notably, the company develops allogeneic CAR T (AlloCAR T) therapies for cancer.

The U.S. regulator’s decision followed a report of a chromosomal abnormality in ALLO-501A CAR T cells in a patient, who was treated in the ALPHA2 study. The abnormality was detected in a bone marrow biopsy that was undertaken to assess pancytopenia (low blood counts). Notably, an investigation is in progress to detect further implications, if any.

Following discussions with the FDA, the company is likely to provide additional updates. Markedly, the end of Phase 1 materials, which were submitted in anticipation of an ALLO-501A pivotal Phase 2 trial, is under the FDA’s review.

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Allogene CMO Rafael Amado said, “Patient safety is our highest priority, and we are committed to working closely with the FDA to evaluate any potential clinical implications of this finding, and determine next steps for advancing ALLO-501A and our clinical programs. As a leading developer of allogeneic cell therapies, we recognize our added responsibility to fully assess all aspects of our therapies to advance the field.” (See Allogene stock charts on TipRanks)

Recently, William Blair analyst Raju Prasad maintained a Buy rating on the stock but did not assign a price target.

Prasad said, “Overall, we believe that the next phase of growth in the widespread use of cell therapies will be catalyzed by the successful development of off-the-shelf modalities. Allogene will have at least five clinical trials in 2021 across both liquid and solid tumors. We, therefore, view Allogene as a core holding for investors looking for exposure to innovation in this subsector with de-risked initial targets and indications.”

Consensus among analysts is a Strong Buy based on 7 Buys and 1 Hold. The average Allogene price target of $39.57 implies 62.3% upside potential to current levels.

Investors should always be aware of the risks involved in any stock. According to the new TipRanks’ Risk Factors tool, ALLO is at risk mainly from two factors: Tech and Innovation, and Finance and Corporate, which contribute 37% and 18%, respectively, to the total 67 risks identified for the stock. Under the Tech and Innovation risk category, ALLO has 25 risks, details of which can be found on the TipRanks website.

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