Disappointing news from the laboratory weighed on AbbVie(NYSE: ABBV) stock as the trading week kicked off. The company had high hopes for a schizophrenia drug it was developing; however, it did not do well in recent testing. On the company's latest readout, investors were aggressively trading out of the shares, leaving them with a 12% decline in late-afternoon trading.
Schizophrenia drug didn't do well in the lab
Just before the market open on Monday, AbbVie revealed that its emraclidine schizophrenia treatment did not meet its primary endpoint in a phase 2 trial. It failed to show a statistically significant reduction in the benchmark Positive and Negative Syndrome Scale (PANSS) compared to a placebo.
The company said, perhaps understating the case, that it is disappointed by the results. It pledged to continue analyzing the data from the trial to determine the next steps with emraclidine. Often, such results put an end to a drug's development.
In the news release about the trial, AbbVie's chief scientific officer Roopal Thakkar said that the company is still "committed to finding better treatments for people living with psychiatric and neurological disorders."
All is not lost
It's no surprise that management would express hope that it'll successfully develop a new product for such afflictions. In early August, it closed a deal valued at $8.7 billion to acquire emraclidine's developer, Cerevel Therapeutics. The schizophrenia drug was one of the main reasons AbbVie bought the company.
Cerevel wasn't a one-trick pony, however. For its considerable spend, AbbVie also acquired several other pipeline programs from the neuroscience-focused biotech. The most promising of these is Parkinson's disease tavapadon, which in contrast to emraclidine has done well in recent late-stage trials.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie. The Motley Fool has a disclosure policy.
