In a recent Penny Stock Detectives article, editor Sasha Cekerevac notes that when biotech companies develop a new drug, this could send shares soaring. Cekerevac believes ACADIA Pharmaceuticals has several drugs in development, including one for the treatment of psychosis in people with Parkinson’s disease, which is currently awaiting FDA approval.
“Approximately 40% of Parkinson’s disease patients have psychosis, and there is no FDA-approved medicine for this condition,” reports Cekerevac. “Biotech companies that can develop drugs to help alleviate this condition can provide a large return.”
Recently, ACADIA was in the news because its drug was unable to pass early-stage trials, notes Cekerevac. This caused the stock to sell off. Recently the CEO of ACADIA stated that the firm plans to conduct the study again; however, this time the company plans to exclude mildly psychotic patients, says Cekerevac.
“The company believes that the trial was unsuccessful because the drug was not that effective for mild psychosis,” claims Cekerevac. “The company feels strongly that it will now be able to win regulatory approval for use of the drug in cases of severe bouts of psychosis.”
Biotech companies in this sector can be very volatile, Cekerevac observes. Biotech companies have many hurdles to go through in the regulatory approval process, some of which might offer an opportunity for the long-term investor, he claims. This is only if the long-term investor believes the minor misstep is temporary in nature, he warns, as the road is not always smooth for biotech companies.
While no one can predict the outcome of medical trials, biotech companies that are close to completing their product development and are active in interesting sectors with a potentially lucrative market might make the stocks quite interesting for long-term investors, believes Cekerevac.
“As with many biotech companies, ACADIA has only a limited amount of funds available to conduct trials,” reports Cekerevac. “Ultimately, the end result for penny stocks in this sector will be to gain regulatory approval and be able to monetize the medicine.”
As with any biotech company with disappointing news, ACADIA’s share price will sell off, notes Cekerevac. Currently, its share price is in the middle between the lows of December and the highs of March, he observes.
“When penny stocks sit in the middle of a range, it’s extremely difficult to know which way they will break,” claims Cekerevac. “Obviously, when…talking about biotech companies, everything is reliant on news regarding their medicine.”
One date to watch is August 8, as this is when the firm will announce its second-quarter 2012 earnings report, Cekerevac advises, noting the firm might release additional information regarding the progress of its drugs in the pipeline. Other than that, it’s a waiting game to see how trials will end up with the new studies, he concludes.
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The editors of Penny Stock Detectives believe low-priced stocks, when researched properly, present investors with great opportunities to accumulate wealth and to increase the value of their investment portfolios. You can learn more about Penny Stock Detectives at http://www.pennystockdetectives.com.
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