It's a crazy world right now, hopefully everyone is taking Covid-19 serious enough to exercise risk management in regards to spreading it around - our elderly and compromised are most at risk, so be smart and don't take it lightly how easily this thing spreads. It's not just about you, your actions could affect others; we are all in this together.
That said, a by-product of the virus is a monumental drop in a whole lotta share prices in the stock market. This could turn into an opportunity for opportune traders not seen since the crash of 2008/2009 when some incredible gems were thrown our way. A few off the top of my head I can recall were Citi (C) for about a buck, Microsoft (MSFT) for twenty one bucks, SiriusXM (SIRI) traded for mere pennies at one point, and Google (GOOG), or Alphabet however you want to call it, dropped again down into the three hundred dollar range. Point being, there were plenty of gems that recovered from that crash, although a few that didn't. Those that were not afraid of the red in the market and jumped in while others were selling ended up making bank.
That may be the case once again. While things look bleak, the markets will persevere.
They will rebound.
One of the stock stories I'm following right now is:
Zosano Pharma (ZSAN): Love this one for under fifty cents. About a year ago it ran to over five bucks and then steadily dropped with some stock offering and a lull in hype or new information coming to/from the investing community. The pullback saw the stock trade down into the fifty cent range - a great buy, considering news of the FDA accepting Zosano's New Drug Application (NDA) for Qtrypta had not hit the wires yet. Qtrypta is Zolsano's proprietary formulation of Zolmitriptan, delivered using a proprietary microneedle system on a patch for the treatment of chronic migraines. Once news hit that the FDA had, in fact, accepted the NDA, shares instantly doubled. Market conditions and another lull in the news cycle have seen it pull back into the forty cent range, that's where I figured it was worth jumping back in.
The expectations of an FDA decision on approval are October of this year. Between now and then, there is a high likelihood, in my opinion, that the share will price will at least double as the investing community "buys the rumor." It's very common for the share price of a biotech / pharma stock to rise into an event such as this one. For a recent example, look at Palatin Technologies (PTN). Last year the stock more than doubled leading into the approval news of the company's female viagra pill, then pulled back on "sell the news" action, aided by bad press from an infamous biotech blogger who through a tantrum that the PhD's at the FDA didn't agree with his blogging opinions, or with the shorts who may or may not have networking with certain biotech bloggers.
Lesson is, as always, be ready to trade in and out of these volatile biotech plays with some trading shares, even if you're holding a core position for the long term. As positive as an outcome may look, you just never know in this sector, so ya gotta protect yourself. Gains aren't gains until they are realized as cash. In my experience, it's better to realize a gain and watched a stock go higher than it is to not sell, then watch all your gains disappear and then-some. VFC's strategy is always to play with some trading shares and look to be on house money by any binary event that may be coming up.
I digressed a bit, but back to ZSAN - market conditions could still push the stock lower and it's also possible that the company will raise cash again before the October decision day - that means there could be some additional dilution coming. On the other hand, the migraine-treatment market is a multi-billion dollar market and ZSAN is trading with a market cap of just twenty-something million right now. The potential is there for much more significant gains than a double, especially if partnership discussions come into play or there is evidence that Qtrypta could quickly gobble away at some market share upon approval.
Another reason to believe that shares may have hit bottom is that the last few days there has been some additional positive reporting regarding the company, similar to reports that assisted the stock to run to over five dollars last year.
Lastly, there is a decent chunk of shares held by big-money tied up in ZSAN, always a pretty decent sign when shares are trading for deflated prices - take a look at what shares of Cel-Sci (CVM) corp did last year (and early this year) when big money started buying in.
For the long term, the company could expand its pipeline based around the micro-needle delivery technology or look to sell it to a bigger player.
For now, this is a pretty decent short term rebound play, in my opinion.
Disclosure: Long ZSAN.
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