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What’s the most amount of money you’ve ever lost?
Ten dollars? A hundred? Maybe you’ve lost a few grand on a speculative stock punt. What about $1 billion?
Sirtex Medical is an ASX listed biotech company. Their lead drug development program is SIRFLOX, which is to treat colorectal cancer. The other day they released the results of their trial.
This had been some time coming. And the markets had bid the company up in anticipation of successful results. Over the last year, the stock has gone from $15.71 on the 18th March 2014 to $39.92 last Friday. That’s a whopping 154% gain.
Then on Monday the company went into trading halt. The results were in. Time to tell the market. If you were a holder of Sirtex stock, you’d have probably been confident of success.
The market certainly was. 154% in a year is a pretty good sign that everyone from fund managers to mum and dad investors were confident.
And then Tuesday the stock came out of trading halt. And the news was bad. Really bad. The primary endpoint of the clinical study was not met.
In other words, the treatment doesn’t work any better than currently available treatments. The stock shed a massive 55% on Tuesday, the equivalent of $1 billion.
It’s a big drop for one of the ASX’s ‘big’ biotech companies. But it’s not the first time it’s happened, and it’s not going to be the last.
The ASX is an interesting beast. At one end of the spectrum, you’ve got multi-billion dollar ‘blue chip’ giants. BHP, Telstra and CBA are a few of them.
Then at the other end of the scale you’ve got the penny-pinchers — stocks that trade literally for the ASX minimum price step of 0.1 cent.
Very few biotech companies sit at the upper echelon. CSL Limited [ASX:CSL] is easily the biggest at $44 billion. Mesoblast is some way off at $1.25 billion.
But down the small, mini and micro cap stocks, you’ve certainly got plenty to choose from. To me, the biotech sector is similar to Aussie junior miners.