Mast Therapeutics Inc (NYSE: MSTX)
Mast Therapeutics is having an incredible day in the market today. A Roth Capital analyst weighed in on the stock in a very positive way. However, will the stock be able to sustain this kind of price growth? Today, we’ll talk about the news that pushed the stock upward, what we saw in the market, and what we can expect to see from MSTX moving forward.
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Roth Capital Still Bullish On MSTX
The big news surrounding Mast Therapeutics today has to do with analyst opinions. More importantly, analyst opinions surrounding the EPIC trial for vexoloxamer. Vexoloxamer is designed as a treatment for sickle cell disease. At this point, investors were expecting the trial data to be released. However, the company said that it would be pushing back the release of the data at least for the next month.
Nonetheless, Michael Higgins, a Roth Capital analyst, doesn’t believe that this is going to be much of an issue. In fact, he said that the market is likely overreacting to the delay. While Higgins does believe that the delay will likely test investor patience, there are no fundamental issues we should be concerned with. Here’s a snippet from what he had to say with regard to MSTX:
“While EPIC results are being delayed roughly one month, the news follows a prior delay as investors’ patience is being tested. While there’s no signal of fundamental problems, the use of the ATM may also have pushed shares lower.”
What We’re Seeing In The Market Today
As mentioned above, MSTX is having an incredible day in the market today following the comments from Higgins of Roth Capital. Currently (1:21), the stock is trading at $0.53 per share after a gain of $0.10 per share (22.60%) thus far today.
What We Can Expect To See Moving Forward
First and foremost, I will say that if the EPIC trial proves to be a success, this stock is likely to climb. So, for the most part, my opinion is bullish. However, it’s also important to weigh the risks associated with any investment, and when it comes to Mast Therapeutics, there definitely are some risks here. So, while my opinion is bullish overall, I am cautiously optimistic.
Personally, I believe that Higgins is downplaying a very real issue with regard to these delays. As pointed out by Douglas W. House, an editor at Seeking Alpha News, it’s important for investors to be cautious. If the data was clearly positive, it would have been released already. The fact that the company has been analyzing the data for 6 months is overwhelmingly concerning. One thing that we do know is that the data is likely to be neither overwhelmingly negative nor overwhelmingly positive. However, I am getting a bit uneasy waiting to see where in the middle the study falls. According to CEO Brian Culley, the company is working diligently to complete the data cleaning, validation, and QA/QC work required to lock and unblind the database.
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The bottom line is that MSTX has quite a bit riding on this study. If the results prove to be positive, they will likely be followed by a NDA, which would send the stock climbing. If the results prove to be negative, the company will be forced to pay $10 million in loans back, putting it between a rock and a hard place financially. Unfortunately, investors are being asked to wait yet another month to figure out what outcome will actually happen, and that’s frustrating. Nonetheless, since we know that the data is not likely overwhelmingly negative, I’m doing my best to remain optimistic.
[Image Courtesy of Wikimedia]