by Robert Martin | November 13, 2013 9:49 am
Shares of Vanda Pharmaceuticals (VNDA) were trading for just under $7 at the start of the week — but they were worth more than $13 by yesterday’s close.
Why were investors so anxious to snatch up VNDA stock?
Well, Vanda Pharmaceuticals is a biopharmaceutical company focused on the development and commercialization of products for the treatment of central nervous system disorders. The Food and Drug Administration (FDA) is slated to review a VNDA sleep therapy treatment called tasimelteon this Thursday.
And yesterday, briefing documents for the upcoming meetings were posted, and Wall Street (clearly) saw them as promising.
Another approved drug would double the number of approved drugs in the VNDA wheelhouse. So far, Vanda Pharmaceuticals only has a schizophrenia treatment. Given the small number of products available, it makes sense that VNDA stock nearly doubled on the news.
But remember, a promising briefing is hardly the same as an actual drug approval. The FDA is scheduled to decide on the drug by Jan. 31, and the panel could easily change its mind in the meantime. Plus, an approved drug for VNDA doesn’t necessarily mean a successful one.
Besides, countless investors that bought VNDA earlier in the year might have done nothing more than regain their big-time losses. VNDA stock traded for as $30 in early 2007, but has been struggling more recently.
Zooming in on this year, VNDA hit $13 in mid-June before sinking under $8. Then, shares of Vanda Pharmaceuticals climbed to just under $13 again in September … before falling all the way below $6.
Now, VNDA stock is back at a 52-week high — but the question remains whether or not it can move to a new one.
Unfortunately, glimpes of bad news can send stocks tumbling in the world of biopharma just as fast as glimpes of good news can send them soaring. Biopharma drugmaker Sarepta Therapeutics (SRPT), for example, plummeted 65% yesterday after the FDA raised concerns about its experimental drug.
So if you made a huge one-day gain in VNDA stock, go ahead and celebrate. But don’t get too comfortable.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.
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