Why Odonate Therapeutics Stock Is Crashing Today - Nasdaq

What happened

Shares of Odonate Therapeutics (NASDAQ: ODT) were crashing 78% as of 11:38 a.m. EDT on Monday. The huge drop came after Odonate announced that it's discontinuing the development of tesetaxel and will "wind down the operations of the Company."

So what

Today's news underscores the risks involved with investing in clinical-stage biotech stocks. The risk is especially great for companies with only one pipeline candidate.

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Odonate had hoped that it would be able to win approval for tesetaxel after the experimental drug achieved its primary endpoint of progression-free survival in a late-stage study for treating metastatic breast cancer. However, the company met with the U.S. Food and Drug Administration (FDA) about the path for approval for the drug. After receiving feedback from the FDA, Odonate decided that the data for tesetaxel wasn't likely to win FDA approval.

Some companies try to pivot in another direction after encountering an obstacle as Odonate experienced. The problem, though, is that Odonate put all of its eggs in one basket with tesetaxel and has no other drug in its pipeline.

Now what

Odonate said it plans to work with patients in its clinical study to transition to other therapies. After that, the company will shut down at some point in the near future.

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Keith Speights 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.

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