Mast Therapeutics Inc (NYSEMKT: MSTX)
Mast Therapeutics had an incredible month in August. In the beginning of September, we saw more of the same. However, more recently, we’ve been seeing declines on the stock. Now investors are starting to ask, “Should I be worried?” The truth is that, while the stock has incredible upside potential, there are also heavy risks that investors should know about. Today, we’ll talk about why there’s a tremendous potential upside here, the risks to consider, what we’re seeing in the market today, and what we can expect to see from MSTX moving forward.
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MSTX Has Incredible Upside Potential
First and foremost, it’s important that investors understand the opportunities that lie ahead here. The potential growth here surrounds a lead candidate, one that we should be hearing more about very soon. That candidate is known as Vexoloxamer, and it is the lead treatment candidate for the company at the moment.
Vexoloxamer is a medication that was created for the treatment of sickle cell disease. MSTX has been working for quite some time on this treatment, investing massive amounts of money into the development in the process, and for good reason. If the company can push this treatment to approval, it could be a massive revenue driver. Investors should hear the most recent updates with regard to the treatment and the EPIC trial results relatively soon.
Sickle cell disease is a big indication. If MSTX can prove that Vexoloxamer is a better treatment than anything else on the market, sales would likely be huge. At the moment, it is estimated that more than 3 million people are dealing with sickle cell disease. It is also estimated that 43 million people around the world have the sickle cell trait. Offering a treatment that covers such a vast audience could be incredibly profitable for the company.
Understanding The Risks
While I would like to say that it is all smooth sailing and that Mast Therapeutics is going to climb without many risks, that’s not necessarily the case. At the moment, there are two big risks that investors are concerned about:
- Delays – The data from the EPIC trial has been delayed multiple times at this point. In fact, just about a week ago, MSTX announced that it was expecting an additional 1-month delay on the data. This really isn’t a good thing in the clinical trial world. If the data proved to be a slam dunk with no concerns, it would have been released relatively quickly. The same would be the case if the data was overwhelmingly negative. However, the fact that the company is taking so much time to release the data tells us that the results are somewhere in the middle. Just how good or just how bad those results are is yet to be seen.
- If The Trial Fails, A Big Bill Is Due! – Financially, MSTX is heavily dependent on strong clinical trial results. If the results prove to be negative and the company does not meet its primary endpoint, it will have a big chunk of debt come due immediately. In fact, if the EPIC trial fails, the company will find itself on the hook to make an immediate $10 million debt payment. This would add insult to injury if the trial is a failure, leading to big declines.
What We’re Seeing In The Market Today
While the past 30 days have been bullish overall for Mast Therapeutics, today isn’t one of the good days in the period. Currently (12:35), the stock is trading at $0.59 per share after a loss of $0.04 per share (6.65%) thus far today.
What I’m Expecting To See Moving Forward
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While I understand the risks, when it comes to MSTX, I remain cautiously optimistic. The incredible upside potential if the EPIC trial proves to be positive outweighs the risk for me. However, if you’re going to make a play on this stock, make sure that you understand that, while there is likely a tremendous opportunity here, things can go bad very quickly. Keep an eye on the trial news and be prepared to exit quickly! This isn’t a trade for the faint of heart.
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