Vera Therapeutics soars on positive test data, only to plunge after competitor trial

Shares of small-cap biotech Vera Therapeutics have plummeted nearly 28% in the last two sessions, after a huge jump in the days before. Last week, Vera and one of its main competitors published clinical trial data for drugs fighting the same disease. Vera took the worst of it, but analysts say this is far from the end of the story.

California-based Vera Therapeutics saw its shares slump on Friday, June 6, and yesterday, June 9, by almost 28% to $22.19 per share. They thus lost much of what they had gained last week, when they soared.

Vera rose 67.5% in just one day on June 2 before extending the gains in the following days to hit its highest mark since mid-February, at $33 per share. This came after the company reported on June 2 that in phase III trials, its drug called atacicept had achieved a 46% reduction from baseline in proteinuria in patients with immunoglobulin A nephropathy. This serious kidney disease can lead to kidney failure, necessitating dialysis or transplantation.

However, the rally of Vera stock lasted only four days. On Friday, Japan's Otsuka Pharmaceutical presented clinical results for a similar drug, which had a 51.2% reduction in proteinuria versus placebo.

Despite the losses over the past two days, Vera is still trading 17% higher than it was before the rally.

The results of the latest atacicept tests were much better than investors expected, driving the rally, wrote Barron's. There was not necessarily a huge difference with Otsuka, but it proved "enough to burst Vera shareholders’ bubbles," the publication noted.

At least in part, the selloff seems justified: The Vera drug at the very least will not be the "obvious best-in-class." On the other hand, analysts warned early Friday that the Otsuka result was not different enough from the Vera result to "definitively show that Otsuka’s drug works better," Barron's points out. How things will shake out is still far from clear.

Evercore ISI analyst Liisa Bayko, as quoted by Barron's, wrote in a note on Friday that the data suggests that "clinically, these medicines are similar.” “We don’t think this is a referendum on the overall efficacy of these drugs,” Raymond James analyst Ryan Deschner wrote the same day.

Vera has a total of 13 "buy" recommendations from coverage analysts versus just one "hold" recommendation, shows MarketWatch data. The average target price of $64.86 per share implies upside of more than 192% versus the last closing price.