Erasca, Inc. (ERAS.US) shares plummeted 48% on Tuesday after the cancer drug developer reported that a patient died after discontinuing a clinical trial, having experienced a serious treatment-related side effect. The patient, a 66-year-old man, was admitted to the emergency room with severe lung inflammation approximately one month after starting the company's therapy. He subsequently passed away after treatment was halted. This disclosure coincided with the company's release of early-stage clinical trial data for its experimental therapies targeting pancreatic cancer and lung cancer. The company had previously stated that its therapy was generally well-tolerated, with mostly low-grade side effects. This marks the largest single-day decline for the company's stock since its initial public offering in 2021. A representative for Erasca did not immediately respond to a request for comment.
HC Wainwright analyst Andres Y. Maldonado wrote in a note to clients, "While this may be an isolated event in a complex patient case, it contradicts the previously favorable safety profile and raises questions regarding attribution and reporting consistency." This development is the second setback for the drug developer in two consecutive days. On Monday, Erasca received a cease-and-desist letter from competitor Revolution Medicines Inc. (RVMD.US), alleging that Erasca's cancer therapy is "substantially equivalent" to certain elements claimed in a Revolution Medicines patent. Erasca's stock had already declined 11% on Monday.
Maldonado, who maintained a "Buy" rating on Erasca, added, "We expect the stock to be under pressure near-term until there is greater clarity on the evolving safety profile and the trajectory of the litigation." Following the setbacks for Erasca, shares of Revolution Medicines rose 10% on Tuesday. The company's stock has maintained an upward trend since it reported results from a late-stage trial earlier this month, which showed its therapy for an aggressive form of pancreatic cancer improved patient survival.
TD Cowen analyst Marc Frahm wrote in a report that the safety report from Erasca leaves many questions unanswered. He continues to view Revolution Medicines as the "leader" in the field and reaffirmed his "Buy" rating on the company.