Here's Why Deciphera Pharmaceuticals Lost 22.7% in March

What happened

Shares of Deciphera Pharmaceuticals (NASDAQ: DCPH) fell nearly 23% last month, according to data from S&P Global Market Intelligence. Investors are concerned that the company's long-awaited transition to commercial operations will be delayed by the coronavirus pandemic. It's not an unreasonable concern. 

The company's lead drug candidate, ripretinib, is widely expected to earn marketing approval from the U.S. Food and Drug Administration (FDA) in advanced gastrointestinal stromal tumors (GIST). But the previously stated regulatory decision deadline of mid-August could be pushed back in light of the current situation. That realization has weighed on the pharma stock.

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So what

Deciphera Pharmaceuticals has announced promising results from multiple clinical trials studying ripretinib in GIST. In one phase 3 trial, individuals taking the drug candidate as a fourth-line treatment (meaning they had been treated unsuccessfully with at least three other treatments) achieved a progression-free survival (PFS) of 6.3 months and a median overall survival (OS) of 15.1 months. By contrast, individuals taking a placebo achieved a PFS of one month and a median OS of 6.6 months. 

There are currently no approved fourth-line treatment options for GIST, which prompted the FDA to accept the new drug application (NDA) for ripretinib for priority review. Regulators expected to make a decision on the NDA by Aug. 13, but investors are now concerned that the coronavirus pandemic will lead to a delay. 

It's still possible for the FDA to stick to the original deadline, but the unfolding health crisis has obviously shifted priorities and disrupted day-to-day operations for the regulator. Many drug companies have also decided to pause clinical trials to protect patients, which has probably affected development activities at Deciphera Pharmaceuticals, too.

Now what

Investors with a long-term mindset might not be too concerned with potential delays for the company's commercialization timeline. Deciphera Pharmaceuticals is very likely to earn marketing approval for ripretinib in advanced GIST -- it just might take a little longer than previously expected for the NDA to be processed. Similarly, the drug candidate has shown promising potential as a second-line treatment option in GIST, which suggests delayed clinical trials will only be a short-term setback for the drug candidate's expansion.

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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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