Today is proving to be a rough day for the biotech market. In reality, it’s a tough day for the US market in general. As investors take in the fact that the Federal Reserve is planning to increase its interest rate in December, they are balancing portfolios for less risk. This, mixed with poor earnings, Enron-like activity, and more is causing quite a bit of turmoil. Here’s what we’re seeing from biotech today.
MannKind Earnings Proved To Be A Big Miss
MannKind Corporation (NASDAQ: MNKD)
MannKind has been struggling in the market for quite some time now. However, I had hoped that the company would produce solid earnings, putting an end to the declines. Unfortunately, that wasn’t the case. MNKD reported earnings yesterday, missing expectations. While analysts expected to see earnings come in at a loss of $0.06 per share, the company actually reported a loss of $0.08 per share. Unfortunately, Afrezza sales are still not up to par. While its becoming harder and harder to wait, I’m still hoping for positive news out of the company in 2016. The reality is that insurers are starting to cover Afrezza and consumer awareness is headed in the upward direction. This should lead to stronger sales for MNKD and eventually, bullish market activity. However, at this point, I’d wait to see the positivity before putting anything into this stock.
XOMA Corp Falls Off Of Yesterday’s Highs
XOMA Corp (NASDAQ: XOMA)
XOMA has been having an incredible time in the market as of late. After announcing the initiation of a Phase 2 study into XOMA 358, investor excitement ensued, and for good reason. The Phase 1 study of XOMA 358 proved to be incredibly positive, leading to positive outlooks for the Phase 2 study. However, today’s activity is a bit different from what we’ve seen. After climbing more than 30% in the market yesterday, XOMA is declining in the market today. Currently (11:35), XOMA is trading at $1.40 per share after a decline of 8.49% so far today. However, the bulls don’t mind the declines. What we’re seeing from XOMA today is a natural correction. It’s important to remember that price movement tends to happen through a series of overreactions. After the massive climb we saw yesterday, it only makes sense that we would see declines today, bringing the stock down to a more sustainable rate.
Valeant Pharmaceuticals Continues To Struggle In The Market
Valeant Pharmaceuticals Intl Inc (NYSE: VRX)
Valeant Pharmaceuticals has been having a rough time in the market as of late, and for good reason. Recently, the company has been being compared to Enron quite a bit, starting with a paper released by Citron. As the story unfolded, we learned about a small pharmacy known as Philidor that VRX allegedly used to pad its numbers. In the beginning of the development, I didn’t want to believe the story. However, with all the evidence that has surfaced about the situation, it’s hard to deny that VRX has been involved in a bit of wrong doing. Unfortunately at this point, I have to agree with Citron’s assessment. With that said, VRX has more declines to come.
The Bottom Line
The bottom line here is that things are changing in the market. Fueled by fear associated with a soon to come interest rate hike, the bull market is starting to have run-ins with the bears. If you haven’t already started to balance your portfolio for risk, you may want to get moving on that.
What Do You Think?
What do you think of the sudden downward movement in the market. Let us know your opinion in the comments below!
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