If there ever was a time to buy “at the sound of the cannons” it is now with biotech company that is searching for a solution of keeping the patient alive and healthy while undergoing chemotherapy. The market reacted to the poor Phase III results in December with a dramatic sell-off. Most investors would be scared away from a stock that lost 70% its value in one day but the savvy speculators see the “blood in the streets” and recognize that now is the time to buy.
Chimerix, Inc. (CMRX, $8.94) is in the business for finding treatments for immunocompromised patients. These patients have had their ability to fight off infections and viruses weakened by chemotherapy, bone marrow transplants, and other treatments. What good is it to kill the cancer if the patient later dies of an infection? This is what CMRX is trying to prevent. And it will also be the key to CMRX’s success in the future. To make huge gains with a biotech stock it has to serve a large market. Cancer, heart disease, diabetes and so on are large markets and when a company creates a medication to combat those diseases the result is a huge jump in the stock price because millions of people will need and want that drug.
CMRX takes a little different approach to having a large market by making treatments like chemotherapy, bone marrow transplants, and kidney transplants more effective. So by combining many small markets like the ones mentioned above and including ones like smallpox CMRX can provide its products on a large market scale. For investors, the disappointing Phase III results and the resulting drop in share price are actually a good thing. The phrase “we learn more from our mistakes than our successes” is never truer. Before CMRX really did not know how effective their medications were. Now the scientists and doctors at CMRX can pour over the data and discover what they need to do ensure their next Phase III test will be successful. Now they know what does not work and can focus on doing more of the right things.
Plus, the sell-off took a lot of risk out of owning CMRX. Can you imagine owning the stock at $55 and worrying every night about what will happen when the Phase III results are published? Now that the uncertainty has been exposed and the share price has been adjusted making it much more of a bargain than a few months ago. The biotech sector is loaded with stories of companies failing their first Phase III test only to regroup, reorganize, and go on to greater things in the future. Just take a look at OHRP. It, too, lost over 70% of its value in one day in March 2015 and has nearly tripled in price since then.
Chimerix, Inc. (CMRX, $8.94) is in the business for finding treatments for immunocompromised patients. These patients have had their ability to fight off infections and viruses weakened by chemotherapy, bone marrow transplants, and other treatments. What good is it to kill the cancer if the patient later dies of an infection? This is what CMRX is trying to prevent. And it will also be the key to CMRX’s success in the future. To make huge gains with a biotech stock it has to serve a large market. Cancer, heart disease, diabetes and so on are large markets and when a company creates a medication to combat those diseases the result is a huge jump in the stock price because millions of people will need and want that drug.
CMRX takes a little different approach to having a large market by making treatments like chemotherapy, bone marrow transplants, and kidney transplants more effective. So by combining many small markets like the ones mentioned above and including ones like smallpox CMRX can provide its products on a large market scale. For investors, the disappointing Phase III results and the resulting drop in share price are actually a good thing. The phrase “we learn more from our mistakes than our successes” is never truer. Before CMRX really did not know how effective their medications were. Now the scientists and doctors at CMRX can pour over the data and discover what they need to do ensure their next Phase III test will be successful. Now they know what does not work and can focus on doing more of the right things.
Plus, the sell-off took a lot of risk out of owning CMRX. Can you imagine owning the stock at $55 and worrying every night about what will happen when the Phase III results are published? Now that the uncertainty has been exposed and the share price has been adjusted making it much more of a bargain than a few months ago. The biotech sector is loaded with stories of companies failing their first Phase III test only to regroup, reorganize, and go on to greater things in the future. Just take a look at OHRP. It, too, lost over 70% of its value in one day in March 2015 and has nearly tripled in price since then.