Yesterday, ELN and WYE were massacred, by Wall Street standards, because of a drug that was being developed for Alzheimer’s disease and failed in phase II trials. The experimental drug was said to “only help half of patients and was linked with a brain-swelling side effect” by Bloomberg.com. (You can read more about it here: http://www.bloomberg.com/apps/news?pid=20601103&refer=news&sid=aseKG.hyyRkw)
In the aftermath, ELN was hit over 40% to below $20 and WYE absorbed a little over a 10% loss. And looking at those numbers now, I clearly recall during the trading day today how one of the companies released a statement reassuring investors everything will be okay, probably hoping to salvage some loss or spur a buyer to step up. That absolutely did not happen. As a matter of fact, specific levels of support became clear targets that were eventually hit out. And nearing the end of the trading day, I recognized the situation as one of those scenarios where, me as a trader wanted to take a short position, but not with very good reason. Because the general motif of the stock (ELN, specifically) was down, the only question was how long would it take for the selling to push the stock down further and what would happen in that time that would effect my intial position.
So, maybe you, as the reader of this quick blurb, and someone who may be effected by the movement of one of these stocks in the future can better answer this question, or at least voice your opinion. Is it really that bad, for Wyeth and Elan? Are these companies not working to further their research and perfect their drug? One of these companies almost lost half their value. And yes, investors were looking forward to a succesful trial and the possible 8 billion dollar payout (so I read) that a successful and marketable drug might of produced in sales. But is all of this over, done and not possible for Wyeth and Elan?
Please do respond to this question. First 15 responses get a beer on SMB.
Afterwhich, I will respond with my opinion.
18 Comments on “Is It Really That Bad?”
In my experience I have seen that smaller Pharmas take a long time to recover when there is bad news against their trial phase products. Sure their drug might still be a success but the market prices in the bad news 3 fold vs the good news on Pharmas, imo. Failing a stage of a trial speakss volumes more than any “everything will be ok” company statement.
In my experience I have seen that smaller Pharmas take a long time to recover when there is bad news against their trial phase products. Sure their drug might still be a success but the market prices in the bad news 3 fold vs the good news on Pharmas, imo. Failing a stage of a trial speakss volumes more than any “everything will be ok” company statement.
Phase II trials involve 300-500 patients displaying targeted pathology.
Doseage & absorbtion are primarily targeted in this stage of testing.
50% of all drugs fail to progress through to Phase III.
This failure rate is standard. It would seem that the market had overvalued the likelihood of progression to Phase III
Add to the mix a British company has developed a drug that dissolves the “Tau protein” that is the primary constituent of the neurofibrillary tangle, and the first to market consideration, with dominant market share might also be a factor.
jog on
duc
Phase II trials involve 300-500 patients displaying targeted pathology.
Doseage & absorbtion are primarily targeted in this stage of testing.
50% of all drugs fail to progress through to Phase III.
This failure rate is standard. It would seem that the market had overvalued the likelihood of progression to Phase III
Add to the mix a British company has developed a drug that dissolves the “Tau protein” that is the primary constituent of the neurofibrillary tangle, and the first to market consideration, with dominant market share might also be a factor.
jog on
duc
for trading i do not bother this question. if price moves with nice vol…. -> done in terms of probability maybe not ;-(
will flights to the beer be paid too…
cheers
for trading i do not bother this question. if price moves with nice vol…. -> done in terms of probability maybe not ;-(
will flights to the beer be paid too…
cheers
ELN is trading at 14 after hours. Guess it wasn’t that bad.
ELN is trading at 14 after hours. Guess it wasn’t that bad.
The problem with this one is that ELN lied about the brain issue about a week or so ago. So this one has confidence issues. But coming down from the mid 30’s in just two days to challenge single digits has to cause some massive short covering. Probably some eaiser money out there as I am not a biotech wiz.
The problem with this one is that ELN lied about the brain issue about a week or so ago. So this one has confidence issues. But coming down from the mid 30’s in just two days to challenge single digits has to cause some massive short covering. Probably some eaiser money out there as I am not a biotech wiz.
ELN is gapping down to 11+ in pre-market today. Investors are dumping the stock…Probably, it is really that bad?
ELN is gapping down to 11+ in pre-market today. Investors are dumping the stock…Probably, it is really that bad?
good WSJ article that came out at 1:21pm est regarding. $3/$6 upside from here w/ over reaction. put in a tight stop in case more fleas with this dog.
good WSJ article that came out at 1:21pm est regarding. $3/$6 upside from here w/ over reaction. put in a tight stop in case more fleas with this dog.
Chaps
Having had a further 24hrs of time and news, some additional thoughts.
http://leduc998.wordpress.com/
jog on
duc
Chaps
Having had a further 24hrs of time and news, some additional thoughts.
http://leduc998.wordpress.com/
jog on
duc
Wyeth merely had a strategic partnership with ELN for this one drug.
They are very diviersified with a large pipeline of drugs. They are tainted with the news of the moment. Selling overdone as the stock had not risen that much in anticipation of this drug working out of the box.
Wyeth merely had a strategic partnership with ELN for this one drug.
They are very diviersified with a large pipeline of drugs. They are tainted with the news of the moment. Selling overdone as the stock had not risen that much in anticipation of this drug working out of the box.