After watching this weeks trading of SRPT, I have to conclude that we've entered into a new investing reality in which, incredibly positive news is actually bad for the share price. And bad news, is, uh.............well, that's apparently bad too.
God forbid that any actual bad news ever comes out, because apparently, all it takes to drive a stock down almost 50% is fanFREAKINGtastic news. I haven't seen or read ONE piece of actual negative news relating to SRPT in weeks, nada, yet down she goes. They even had their main competitors, if you can actually call them that, get smacked in the face this week with questions about cancer, on top of proteinuria for Prosena, thus implying strongly that SRPT's third generation formulas are vastly superior.........but, gosh, even though that's considered a good thing, down she goes.
Unexpected stabilization of the difficult to reach diaphragm and heart? Wow! Down she goes. Kids actually showing improvement, when really, everybody was just hoping that this drug, or any drug really, could arrest the decline. Down she goes. Mendell, the world renowned expert is almost out of his mind with enthusiam? Look out below.
I would love to read actual FACTS that support the price dropping, and I"ve looked hard. But, the facts are uniformly positive as best I can tell. So , we've either entered a new investing reality, where facts don't matter, only who has the most money to manipulate the price. Or...........like last time when the great 36 week news only caused the share price to rise a little bit, we are being presented with an incredible buying opportunity.
1. Lots of buyers getting in at $4/$7/$15 who are in a commanding position and motivated to sell, creating downward pressure. 45-to-4 in a 4 months is RIDICULOUS. In the 90s CSCO did about 900-to-1 from the bottom to the peak (about 97% average annual return) and that was insane.
2. Much of the up-trading to $45 wasn't based in any kind of tech analysis or valuation or fundamentals or any objective metric or standard.
3. There is still something to prove here in terms of generating revenue. IMO this is the big one. Ultimately Jerry McGuire thinking will take over. "Show me the money!"
4. Uncertainty surrounding the reported data. We all know any kind of argument can be spun. You can put a magnifying glass on this that or the other argument and treat the counter-argument looking at it from a telescope and play a surreal game that doesn't keep anything in perspective. Ignoring the down-side can be a deadly sin.
Facts do matter but only if you hold your shares long enough. Look at the stock charts of recent biotech run ups none of them reached where they are now in one shot. You will see their charts are full of ups and downs including some very drastic ones. SRPT is up more than 500% since it is June low. Barring any news this is consolidation time. If you are not in this for a quick buck or two I strongly believe you will be rewarded big time as long as you hold at least for a year or maybe two. This could be a 3 or a 4-bagger in a year with FDA approval. Just hold tight ...
You forgot one more: No huge secondary or rush for insider sells? That must mean something really bad happened! Down the price goes! I would also love to see a concrete story or analysis why this stock has been sinking but I have searched far and wide. It speaks volumes that all the other thousands of investors looking for a reason for the drop can't find anything either, except for a sketchy blogger that routinely gets basic facts about the company, the trial, and the results wrong.
Apparently this crackpot blogger's word is worth more than the analysts at Wedbush and Piper, and the writers at Barron's and Forbes. Maybe that guy at RNAi should start charging big bucks for access to his blog!
In the absence of concrete reasons or signs that something bad has happened, I have to assume, like when the price was at 3 and 15, that the market just has this horribly wrong. Regardless of who is doing the manipulating, it can't go on forever. Great results lead to good things: Upgrades, partnerships, grants, media attention, buyout rumors, interest in other applications of the technology, etc. Eventually, letting this stock run will just be a whole lot easier than keeping it down. I plan to be long the day that happens, not jumping in the day after.
1. we don't know if eteplirsen works longer term. we know it provides an initial clinical benefit, but do not yet know if it will sustain over time.
2. we don't know if it will get AA. if not, we don't know the size or cost of a phase III. By the way, SRPT doesn't have the money to fund a phase III at this time.
3. We don't know what we can sell the drug for- there are a lot of estimates on revenue but they vary widely.
4. We don't know the manufacturing costs. Since we don't know the sales price either, we don't know the profitability of this drug.
5. Eteplirsen helps the symptoms of DMD, but doesn't cure it. If we are entering the golden age of muscular dystrophy advancement, then there is a chance some other company finds a cure leaving eteplirsen worthless.
I could go on and on. The point is that there is substantial risk in the drug. I've never shorted it and only played it from the long side. I've made a lot of money in it. I have followed it a long time and have a family member with DMD, so I know how brutal this disease really is. Longer term, I think SRPT goes a lot higher. But risks remain and it will remain a volatile stock. I think the CEO has done an excellent job and am a fan for this company.