If you're a skeptical biotech investor (and we all should be), then you must be alarmed by the frothiness in the small-cap tier. Today, investors are buying truckloads of OxiGene (OXGN-Nasdaq) for reasons that confound me! Same goes with Entremed (ENMD-Nasdaq) and Introgen (INGN-Nasdaq).
Stepping back, biotechs with a market cap under $100M are up 135% for the year, compared to 45% gains in biotechs with market caps greater than $5B, according to stats compiled by Banc of America Securities. Now, I understand it's natural for rising tides to lift all boats -- and for oft-ignored small caps to perform better relatively speaking -- but some of these small-cap moves are wild speculation at its worst.
I'm going to pick on OxiGene since the stock is up more than 90% -- 90%!!!! -- today. Why? The company issued a press release about the start of a phase I/II study of its experimental cancer drug, CA4P. Now, we won't even touch the issue of whether the science behind C4AP is valid or junk (and boy, we could debate this topic for awhile!), instead just look at the details of the study. This is essentially a pilot study (read: early stage!) 20-30 ovarian cancer patients taking CA4P in combination with two chemo drugs -- no control arm and all patients enrolled at a single hospital. This is a science experiment, not a study that investors should pay attention to, especially before it even begins!
And yes, I know that last week, the FDA granted "fast track" status to CA4P for another cancer indication. The stock ripped on the news. Why? Why? Folks, "fast track" is not that big of a deal.
Sorry, none of this news is important enough to warrant the kind of move you're seeing in OXGN. No way. But hey, the stock moves nonetheless. Speculation -- it's maddening! I feel sorry for the last investor left holding the bag.