Here's why GI Dynamics Inc has crashed 53%

Shareholders of GI Dynamics Inc (ASX:GID) have watched helplessly as their shares have plummeted. Find out why…

Ryan Newman ❯

Ryan Newman (CFA) is the Director of Research of The Motley Fool Australia, and Portfolio Manager for the Pro and North Star services. Ryan’s interest in investing and stocks began at a young. His journey with The Motley Fool started first as a member but when the company first came to Australia he joined the team as one of our writers. Recognising his investing talent and passion, it wasn’t long before he was approached to join the investing team as a research analyst on Pro. Ryan is passionate about learning and continual development. He earned his Chartered Financial Analyst (CFA) designation in 2022, and has completed his Bachelor of Accounting and his Graduate Certificate of Corporate Finance. Ryan loves spending time with his young family as well as non-fiction reading, catching the latest movies and following his sports team, the St Kilda Saints (AFL).

Published March 10, 2015 3:15 pm AEDT

Shareholders of GI Dynamics Inc (ASX: GID) have watched helplessly as their shares have plummeted recently following an unfavourable announcement regarding its key product, EndoBarrier. The stock has crashed 6.3% today, giving it a total loss of 53% over the last six days.

Source: Yahoo! Finance

Last week, the junior medical device maker emerged from a trading halt which had been requested pending a "material announcement" regarding its business. Unfortunately, it was later confirmed that the US Food and Drug Administration (FDA) had put a hold on enrolment in the company's ongoing clinical trial of EndoBarrier in the US, requesting further information regarding its risk/benefit profile. An unexpectedly high number of patients had become ill during the trial.

While the setback is certainly being felt by shareholders, investors would have been well aware of the high level of risk involved in biotechnology investments. While some, including Sirtex Medical Limited (ASX: SRX) and CSL Limited (ASX: CSL) have become successful over the years, countless others have resulted in terrible investor losses.

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