Why the Actinogen (ASX:ACW) share price is sinking 16% on Tuesday

A clinical trial update isn't enough to draw investors in today.

| More on:
man bending over to look at red arrow crashing down through the ground

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares in Australian biotech Actinogen Medical Ltd (ASX: ACW) are crawling lower today, currently trading down 15.79% at 16 cents apiece.

Investors are selling Actinogen shares today despite the company receiving clearance from the US Food and Drug Administration (FDA) to commence a phase 2 trial on its Xanamem label.

Here are the details.

But first – what even is Actinogen Medical?

Actinogen is a biotechnology and research company. It is working on a medical breakthrough in neurological disorders that cause cognitive impairment.

Its lead drug candidate, Xanamem, is being investigated for potential breakthroughs in Alzheimer's disease, Fragile X syndrome and other neurological diseases.

Many kinds of neurological conditions are either genetic, irreversible or have no known effective treatments – and unfortunately, no cure.

The compound works by modulating the 'stress hormone' cortisol, which has been shown to impair brain function and has been associated with several neurodegenerative conditions.

At the time of writing, Actinogen Medical has a market capitalisation of $317 million.

Why is the Actinogen share price sinking lower?

Actinogen advised it has received approval from the FDA to commence a Phase 2 trial on its Xanamem candidate, under an Investigational New Drug (IND) designation.

Being a Phase 2 trial, it is investigating the efficacy and safety of the Xanamem compound in treating male adolescents and young adults with Fragile X syndrome.

Fragile X syndrome is a hereditary disorder that causes mild to moderate intellectual disability, alongside behavioural and learning challenges.

It is thought to affect 1 in 4,000 males and 1 in 5,000–8,000 females worldwide. As observed, it primarily affects males, as it relates to genetics and the passing down of genes from parent to child.

Actinogen's trial will enrol around 50 patients. The cohort will receive treatment over 12 weeks to observe the effects of Xanamem on Fragile X syndrome.

Investors can expect readouts from the study's results sometime in 2023, per the announcement.

Aside from this, Actinogen also advised it had signed a letter of intent with Worldwide Clinical Trials Limited (WWC) to 'operationalise' the trial.

The move appears to be strategic from Actinogen, given that WWC is a research organisation that specialises in neurological, paediatric and rare diseases.

The letter of intent was signed for an amount of $944,724 and funds will be used "for start-up activities to enable prompt activation of [trial] sites".

It has a duration of 60 days whilst a full contract is negotiated but can be cancelled with a full refund of any unused monies.

Actinogen Medical share price snapshot

It's been a year of outsized returns for the Actinogen Medical share price, having posted a gain of 627% in the last 12 months after rallying 662% this year to date.

Each of these results has shot past the benchmark S&P/ASX 200 index (ASX: XJO)'s climb of around 20% in that time.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Healthcare Shares

a biomedical researcher sits at his desk with his hand on his chin, thinking and giving a small smile with a microscope next to him and an array of test tubes and beackers behind him on shelves in a well-lit bright office.
Healthcare Shares

Broker says this ASX 200 biotech stock is a top buy

Let's see what Bell Potter is saying about this biotech.

Read more »

Cropped shot of an attractive young female scientist working on her computer in the laboratory.
Healthcare Shares

Why CSL shares are a buy today despite the looming Trump tariffs

A leading expert believes CSL shares are still trading for a bargain today. Here's why.

Read more »

A businesswoman pulls her glasses down in shock to look at the bad news on her computer.
Healthcare Shares

Why did the Telix share price just crash 16%?

Investors are sending the Telix share price plunging today. But why?

Read more »

Broker analysing the share price.
Healthcare Shares

Expert: 2 ASX healthcare stocks to avoid before reporting season

Not all healthcare stocks are created equal.

Read more »

A group of people in a corporate setting do a collective high five.
Healthcare Shares

Should I buy Pro Medicus or CSL shares ahead of earnings season?

The ASX healthcare sector may be currently undervalued.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Healthcare Shares

Why Mesoblast shares can keep storming higher

More big returns could be on the way for buyers of this high risk stock according to Bell Potter.

Read more »

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

The Mesoblast share price just rocketed 38%! Here's why

ASX investors just sent the Mesoblast share price up 38%. But why?

Read more »

couple having a happy discussion with a banker
Healthcare Shares

Expert: 4 ASX healthcare stocks to buy ahead of reporting season

Could these ASX healthcare stocks be good additions to your portfolio?

Read more »