Mid-cap biotech stocks soared on the back of successful trials of a hot flash treatment

Shares of Canadian biotech company AbCellera Biologics—in which Palantir Technologies co-founder Peter Thiel invested at an early stage—soared nearly 35% on the Nasdaq on August 10, reaching a three-year high. The company reported successful clinical data for its experimental drug to treat hot flashes (a sensation of heat in the face, neck, and chest), which it calls potentially the best in its class.

AbCellera shares rose nearly 35% during trading on August 10, reaching $9.34. This is the highest level since the summer of 2023. In premarket trading on August 11, the stock was down about 0.5%.

Investors reacted to the release of interim data from the second, mid-phase clinical trials of the drug ABCL635. The drug is designed to block the biological symptoms of menopause, the most common of which are hot flashes and night sweats.

The results showed a reduction in both the frequency and severity of menopausal symptoms, and the patients did not experience any serious adverse reactions, according to the press release.

“We believe that ABCL635 has the potential to become a blockbuster. The efficacy data exceed even the most ambitious scenarios we dared to consider,” said AbCellera CEO Carl Hansen during a conference call with investors (as quoted by Bloomberg).

The company believes that the drug can significantly improve women’s lives. Hot flashes affect up to 80% of women and can persist for many years after the last menstrual period, impacting quality of life—including sleep, concentration, mood, work, social activities, and relationships, according to AbCellera.

AbCellera was founded in 2012 by a group of scientists from the University of British Columbia. They wanted to commercialize a technology that makes it possible to quickly identify antibodies in human blood that are needed to develop drugs. This technology played a key role in the development of a coronavirus drug. Within a few days, AbCellera analyzed more than 5 million blood cells from a patient who had recovered from the coronavirus, identified 500 unique antibodies, and created a molecule.

The pharmaceutical giant Eli Lilly then acquired the rights to develop the drug, registered it under the name Bamlanivimab, conducted clinical trials, and obtained regulatory approval in the U.S. and Europe for its use under emergency authorization. Eli Lilly later discontinued sales of the drug due to the emergence of new strains of the virus.

In November 2020, Palantir co-founder Peter Thiel joined AbCellera’s board of directors (he remained on the board until 2024), and in December, the company held its IPO on Nasdaq, offering investors just over 24 million shares at $20 each. By noon on the first day of trading, the stock’s value had soared by 250%. But since then, the company has lost nearly 85% of its value.

Nevertheless, Wall Street is optimistic about its prospects. All nine analysts who cover AbCellera recommend buying its stock, according to MarketWatch. The average price target of $14.90 implies a 60% upside from the last closing price.