Cabaletta Bio's and Gracell's stock falls sharply as FDA investigates risks of CAR-T therapy

By Eleanor Laise

Selloff may be overdone, analysts say, as FDA weighs regulatory action

Shares of Cabaletta Bio Inc. (CABA), Gracell Biotechnologies Inc. (GRCL) and other smaller biotech companies involved in developing CAR-T cell therapies plunged Tuesday after the Food and Drug Administration said it was investigating cancer risks potentially associated with all currently approved products in the class.

CAR-T therapies alter immune cells called T cells so that they can attack cancer cells.

The FDA has received reports of T-cell malignancies, including a certain type of lymphoma, in patients treated with CAR-T therapies, the agency said in a statement Tuesday. The risk of the malignancies applies to all approved products in the class, including Bristol Myers Squibb Co.'s (BMY) Abecma and Breyanzi, Novartis AG's (NVS) Kymriah, and Tecartus and Yescarta, which are made by Kite Pharma, a unit of Gilead Sciences Inc. (GILD).

The overall benefit of the products continues to outweigh their potential risks, the FDA said, although the agency is investigating potential severe outcomes, including hospitalization and death, and evaluating the need for regulatory action.

The products' initial approvals included requirements to conduct long-term safety studies to evaluate the risk of secondary malignancies after treatment, the FDA said. Patients treated with the therapies should get lifelong monitoring for new malignancies, the agency said.

Novartis said in a statement that more than 10,000 patients have been treated with Kymriah since its 2017 U.S. regulatory approval, and "there is no evidence to date that would change our confidence" in its risk-benefit profile. The company said it has not identified a causal relationship between Kymriah and secondary malignancies as part of its continuous safety monitoring.

A Gilead spokesperson said the company is "confident in the overall safety profile of both Tecartus and Yescarta," adding that there is no evidence that treatment with the therapies causes development of new malignancies. "We have a rigorous process in place to continuously monitor for and report adverse events to regulatory authorities," the spokesperson said.

A Bristol Myers Squibb spokesperson said that more than 4,700 patients have been treated with Abecma and Breyanzi, and the company has not seen any CAR-positive T-cell malignancy cases. "Patient safety is a top priority for BMS, and we remain confident in the safety profile and clinical value of our cell therapies," the spokesperson said.

The other drugmakers did not immediately respond to requests for comment.

Shares of smaller biotech players in the space were hardest hit by the news. Cabaletta Bio shares were down 27% Tuesday, while Gracell shares fell more than 16%.

Some analysts said the selloff was overdone. Whether a result of disease itself or the treatments, T-cell lymphoma is a known risk in oncology and autoimmune disease, and "this investigation doesn't prove any causal association," Cantor Fitzgerald analysts said in a note Tuesday.

The FDA's announcement should not have a major impact on Cabaletta's development of its lead product candidate, the CAR-T therapy CABA-201, given its strong efficacy data and precedent implying that a low risk of malignancy would be acceptable, TD Cowen analysts said in a note Tuesday.

-Eleanor Laise

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11-28-23 1704ET

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