Well, that sure didn’t take long. Vascular Biogenics Ltd (VBLT) stock is up a whopping 80% in midday trading on Monday after the small-cap biotech announced impressive Phase I/II trial results for its recurrent platinum resistant ovarian cancer treatment, VB-111.
It’s a tremendous reversal of fortune for VBLT stock owners; prior to Monday’s announcement, shares were down a whopping 24% year-to-date. Now they’re sitting on some handsome gains.
Let’s take a look at what Wall Street’s so excited about with VBLT stock today.
VBLT Stock: Years Away From Blockbuster?
VB-111’s ability to treat those with recurrent platinum-resistant ovarian cancer was statistically significant, boasting median survival rates of 810 days in the drug dose arm, while median survival rates in the low-dose arm were just 172 days.
Perhaps even more impressive was the doubling in response rate when compared to Avastin, a drug owned by Roche’s (RHHBY) Genentech.
To give you some idea of the reason VBLT stock owners are excited, Avastin sales were 1.7 billion Swiss Francs in the first quarter of 2016. Converted to U.S. dollars, that’s $1.76 billion — in one quarter.
That gives you a sense of the dollar signs VBLT stock owners are seeing today.
Granted, various combinations of Avastin and other drugs are approved for far more indications than just ovarian cancer, including: cervical cancer, metastatic carcinoma of the colon or rectum, certain types of non-squamous non-small cell lung cancer, glioblastoma and metastatic renal cell carcinoma.
That means that Genentech has a much larger patient population to sell to, so its Avastin revenues aren’t directly comparable to what Vascular Biogenics shareholders could expect. Plus, VBLT still has to take VB-111 to Phase III trials, deliver results there and get approved by the FDA.
That process won’t happen overnight.
Back to VBLT stock’s enormous intraday gains: They have only magnified as the day has marched on. In pre-market trading, VBLT stock was up about 33%. By the time 9:30 a.m. swung around, shares were up 46% at the open. Over the next few hours, Vascular Biogenics shares would trend another 30 percentage points higher fro mthere.
There are a few reasons — aside from the great study results — that could be contributing to VBLT stock’s meteoric rise today.
First of all, there are individual investors, day traders, algorithms and hedge funds that pounce on news like this, and buy in even after huge early morning gains.
Secondly, there’s the ever-present short squeeze issue. As of mid-May, the last date for which data was available, there were more than 260,000 shares of VBLT stock sold short. Using average daily volume, that would take just over two trading days for short sellers to buy back shares and cover their positions. But by 11:30 a.m. today, 15 million shares had already traded, so short sellers would’ve had no problem buying back their shares today.
When all is said and done, though, shareholders had every reason to send VBLT shares soaring today.
Don’t be surprised to see a little more follow-through buying in coming days.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at firstname.lastname@example.org.