I am watching the action in $VVUS this afternoon and it is staggering. I first took note of it around 2:40PM when it became a Trending Ticker on StockTwits and just as the stock began ripping higher.
Here’s the intraday chart for your perusal:
It reminded me of a run in I had with $DSCO some years ago, a stock that is still wreaking havoc on those who gamble in the biotech space today.
The company was scheduled to recieve news from the FDA regarding its drug Surfaxin which is used to treat infants with respitory problems.
Playing these types of stocks was not in our playbook at all but it just so happened that my partner’s wife at the hedge fund was one of the top pediatric pulmonologists in the world.
She told us that this drug was for real and that it would be much needed and much used so we bought shares.
Some days later when Surfaxin did not receive approval but an approvable letter, the stock got killed. I don’t remember the exact series of events but I do recall that there were also persistent production problems with the drug and the volatile selling was relentless.
I think we took a 20%+ loss.
There was no one more qualified to provide insight than the person we had in our corner.
It didn’t really matter though because the sets of variables involved are so complex and idiosyncratic that playing the news was still just a gamble.
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