Mast Therapeutics Inc (NYSEMKT: MSTX)
Mast Therapeutics has been on quite the rollercoaster ride as of late. Over the past couple of weeks, we saw the stock rise from under $0.40 per share to more than $0.60 per share. However, it is back on the down trend in a big way. Nonetheless, as this thing falls, it becomes more and more appealing. Today, we’ll talk about why we saw recent gains, why we’re seeing declines, what we’re seeing in the market today, and the opportunity MSTX could be creating at the moment.
Why MSTX Saw Big Gains Recently
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As mentioned above, Mast Therapeutics recently saw a big run upward, and for good reason. The company has been working on a treatment known as Vexoloxamer. The treatment is designed to assist consumers with sickle cell disease.
Of course, in order to gain approval for the treatment, MSTX has to take part in clinical trials. The most recent data surrounding a clinical trial known as EPIC has been delayed for quite some time now. In fact, less than 2 weeks ago, the company said that the data would be delayed for up to another month.
As a result, investors got cold feet and started to get rid of their shares. However, a key analyst weighed in to inform investors that they shouldn’t be as concerned about the delays as they were proving to be. As a result, the value of MSTX popped back up before falling once again more recently.
Why We’re Seeing Declines Again
Unfortunately, Mast Therapeutics is back on the down trend. However, this is also very understandable. Ultimately, there are two big areas of concern for investors, and the longer the results are delayed, the bigger these concerns get. Here’s what investors are worried about:
- Delays – The delays are a big hit to investor confidence. After all, those that follow the biotechnology industry closely known that if clinical results are overwhelmingly positive or overwhelmingly negative, they are generally released quickly. However, when they are somewhere in the middle, we tend to see delays. At the end of the day, the future of MSTX depends largely on how good or how bad these results are. So, the delays are causing major concerns.
- Debt – If the EPIC trial results prove to be positive, MSTX investors aren’t concerned at all. However, if the results prove to be negative, insult will be added to injury. That’s because the company currently holds a debt that is contingent on the success of the trials. If EPIC fails, the company will be forced to immediately start paying back debt, starting with an initial payment due upon completion of the trial in the amount of $10 million. That would prove to be a big hit.
At the end of the day, as investors are forced to wait, they are also forced to think of the risk. Unfortunately, that isn’t working out well for Mast Therapeutics.
What We’re Seeing From The Stock Today
Unfortunately, today appears to be another day full of declines for MSTX as investors continue to show their concerns surrounding delays. Currently (1:13), the stock is trading at $0.49 per share after a loss of $0.02 per share (3.71%) thus far today.
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In My Opinion, This Is An Opportunity
The truth is that I am concerned with delays surrounding the EPIC trial. MSTX should have made the data available some time ago. However, as the price of the stock falls, I can’t help but think of the word “opportunity”. In the market, opportunity is largely defined as a time when the value of a stock falls low enough to pick it up and sell it later for a profit. In this case, because of the delays, we know that Mast Therapeutics isn’t likely to release overwhelmingly negative data, and the middle isn’t always a bad thing. As long as the primary endpoint is met, the company will do just fine. While I do remain cautiously optimistic, I do remain optimistic. At the end of the day, every penny this thing falls may represent a stronger opportunity ahead.
[Image Courtesy of Wikipedia]