ChemoCentryx (CCXI) Stock Is Climbing: Here’s Why

ChemoCentryx Inc (NASDAQ: CCXI) is screaming for the top in the market today, gaining momentum after yesterday’s more than 3% gains. The gains come after a massive decline in share values in May as investors see what could become a discounted opportunity to get in on future gains. However, there are major concerns to consider before diving in. 

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Why CCXI Fell In May

May proved to be a horrible month for ChemoCentryx, with the stock falling nearly 80% in the month. So, why did the sharp decline happen?

It has to do with one of the company’s treatments that are under development. 

The treatment, known as avacopan, is being developed by the company as a therapeutic option for patients with antineutrophil cytoplasmic autoantibody (ANCA)-associated vasculitis (AAV). 

Last month an FDA advisory committee returned a split vote as to whether or not the regulatory agency should approve the drug. In terms of safety profile and benefit-risk profile in treating adult AAV patients, the vote came in at 10 votes for and eight votes against approval. When it comes to efficacy data and whether that efficacy data supported approval, the votes were split down the middle, with nine for and nine against. 

Importantly the advisory committee isn’t the end all be all. Ultimately, it’s up to the regulatory agency to make their own opinions. Nonetheless, drugs with split votes by the committee have a lower chance of achieving approval than those with unanimous votes, which is concerning to CCXI investors. 

To make matters worse, it was recently announced that three FDA Committee members have resigned from their posts after a scandal surrounding the approval of an Alzheimer’s disease drug developed by Biogen. 

Unfortunately for ChemoCentrix, and its investors, these resignations will likely lead to more scrutiny when it comes to the approval of drugs with mixed votes, and could be a sign that approval is now out of reach. 

Why The Stock Is Headed Up

While there are concerns to consider here, many see CCXI as a major value play. Ultimately, it’s not over at the FDA until the fat lady sings, and I haven’t heard any music yet. 

There’s still a chance that the drug will be approved, and if this turns out to be the case, we can expect to see tremendous growth out of the stock. As a result, there are several messages across message boards suggesting that investors should pile in… and there’s some validity to that statement. 

Due to the harsh declines experienced by ChemoCentrix last month, the stock is trading at incredibly low prices with heavy short interest. Regardless of whether or not the drug gets approved, there is potential for a short squeeze in the short term, which would yield tremendous gains. In the long term, holding the stock until the FDA’s decision may be a risky endeavor, but if an approval is handed down, the potential gains are hard to ignore. 

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The Bottom Line

The bottom line here is simple. Given the recent advisory committee vote, and state of the FDA, there are definitely risks to consider before diving into CCXI stock. However, with the potential for a short squeeze, and dramatic long run gains if the drug is approved, that risk may be worth taking for many. 

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