On Thursday, Allogene Therapeutics Inc. (NASDAQ:ALLO) shares plummeted by more than 37% in the after-hours session after the US Food and Drug Administration (FDA) put on hold the clinical trial for AlloCAR T. The stock had surged 1.7% during the regular trading hours.
Allogene is pioneering allogeneic chimeric antigen receptor T cell (AlloCAR T™) therapies for cancer. The ALLO-715 for multiple myeloma treatment has already received an “orphan drug status†from the FDA, but the halting of the AlloCAR-T trials could be a major concern for the company as a whole.
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According to the study results, a chromosomal abnormality was spotted in some of the company’s CAR T cells given to a patient.
Should you bet on ALLO’s inventive therapies?
Although Allogene is still a clinical-stage company, results from some of its products look promising, which is why shares surged nearly 50% at the start of the year. However, its products also seem to be facing some headwinds after Thursday’s FDA announcement.
Therefore, given the current circumstances, it would be best to monitor the developments before betting on Allogene’s exciting cancer treatment therapies.
Stock plummets to new lows
Technically, Allogene shares appear to have plummeted to a new all-time high after falling to $14.25 in the after-hours trading. The stock went public in October 2018 at an IPO price of $18.00 per share.
Before Thursday’s aftermarket plunge, ALLO had clear support and resistance levels at $20.67 and $27.60, respectively, with more options slightly below and above them.
Therefore, if the stock price bounces back when trading opens on Friday, investors could be targeting profits at Thursday’s closing support levels, rather than at the resistance zones.
Not time to buy
In summary, although Allogene looks like an exciting long-term prospect amid its market-reinventing cancer therapies, it would be best to monitor developments in the coming months before buying.
However, for those who already own the stock, it may not be the right time to sell. It would be better to wait for the news impact to dissipate, potentially resulting in a short-term rebound.
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