Onyx Pharmaceuticals (ONXX) and over reacting

I've been watching Onyx Pharmaceuticals for 6 months now, ever since I bought a few shares of their stock. I posted about it at that time. As you can see from that link, the stock was sharply down on some bad news and I bought my shares at the corrected price. That was due to my feeling that the stock had been unjustly punished by the market for news that didn't really hurt their core business very sharply.

Today the stock is soaring on good news. To wit, a report that stated that their Nexavar cancer medicine, which they share with Bayer, helped patients with liver tumors live longer. While it is certainly good news for the company, I don't think it's good enough to warrent the stock moving up 80%--yet that's what has happened. Biotech stocks really do move irrationally. It's like watching the mood swings of a 13 year old girl. And oddly enough that's half the fun of investing in biotech stocks. Go figure. (and in case you're curious--I did sell it, I don't trust this gain long term)


Bayer, Onyx Say Nexavar Helps Liver Cancer Patients

By Kristen Hallam

Feb. 12 (Bloomberg) -- Bayer AG and U.S. partner Onyx Pharmaceuticals Inc. said their Nexavar cancer medicine helped patients with liver tumors live longer. Onyx shares surged as much as 62 percent.

The treatment showed such promise that the companies will stop the late-stage trial and give all patients access to Nexavar. Discussions with U.S. and European regulators over approval of the drug will continue, Leverkusen, Germany-based Bayer and Onyx said today in a PRNewswire release.


UPDATE: by the end of trading at 4pm, almost 56 million shares of ONXX traded hands. That's 125 times the normal volume--which is a staggering increase. What makes it so staggering is that there's only 44 million shares of the company outstanding. So that's as if every single share of the company was bought and sold--and then 25% of those people turned around and traded the shares again. Amazing. And I had a little itty bitty part of that volume.

At 4pm, the end of the trading day, the price closed at $24.15 which was somewhat off the high of $25.20 and way above the low of the day, $17.95. All these prices were way above what it traded at on Friday, the last day the markets were open. On Friday ONXX traded between $12.26 and $12.56. Today's close marked a 96.98% increase from Friday's close.

I wish I was able to get a better price today but even though I sold at the low end I still managed to get a 50% gain in 2 months. However people that bought the stock on Friday, could have sold it today for double what they paid for it. A 100% gain over the weekend. Gotta love it.

Comments

Bobkat said…
Sounds like you made a smart move there!

I was amused at your likening the market to a 13 year old girl... i assume that if it was a 13 year old boy then it would lock itself in it's room and not get out of bed LOL :-)
1:34 PM
utenzi said…
...and there are most definitely stocks that act exactly like that too, B-K. They're ones you really don't want to own.
1:39 PM
Anonymous said…
Oh don't you love it? I'm not much of an investor, but my company's profit sharing every year is invested automatically in shares of company stock. I could elect to change that now that I'm vested, but I haven't yet because I don't know what I'm doing. So daily, at work, I check the stock, it's been doing well just lately but my co-workers & I have no doubt that the company will do something which will cause it to fall sharply soon.
10:43 PM
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