Bellus Health (BLU.T) stock collapses, but is there value in the pickings?

boomshanka

Things you don’t want to see from your speculative drug research company stock:

[Bellus Health] (BLU.T), a drug development company focused on rare diseases, today announced top-line results from the Phase 3 study of KIACTA™ (eprodisate) for the treatment of AA amyloidosis.

On the upside:

KIACTA™ was shown to be safe and well tolerated over treatment periods of greater than 4 years.

On the downside:

In the study, KIACTA™ did not meet the primary efficacy endpoint in slowing renal function decline.

If I were to put out a press release of this nature about my own life, it might read like this:

Chris Parry sleeping with Charlize Theron was shown to be safe and well tolerated over periods of greater than 4 years.

In the study, Charlize Theron showed a complete lack of interest in sleeping with Chris Parry, for any length of time, be it safe or otherwise.

Chris Parry will take some time to go over the data before assessing future plans involving sleeping with Charlize Theron.

Bellus stock cratered on the news, from $2.40 down to around $0.40, or an 83% plunge. It’s been slumping since as vultures wonder whether this might be a good time to get back in, considering Bellus has other formulations going through the FDA rounds, for other treatments.

But today saw another 20.5% plunge, at the time of writing, down a further $0.08 to $0.30.

For background: A week ago, this was a $262 million company.. Today it’s worth $21 million. As to whether that’s an overvaluation or an undervaluation.. any decision one way or another, right now, is a total dice roll with high risk and high reward.

Personally, I think when a company loses that much market cap, that quickly, it puts in place a lot of potential problems as big investors ponder whether to double down or dump their losses, and the company struggles to raise money going forward at a decent valuation. Then there’s the chance that Bellus may slip off the big board, which is a whole new issue with some institutional investors.

Back in 2004, Bellus used to sell for $1000 a share. It will take a long time and a lot of luck for it to get back to a dollar from here.

–Chris Parry

http://www.twitter.com/chrisparry

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