Why OvaScience Inc. Shares Tumbled
Sep 11th 2013 1:58PM
Updated Sep 11th 2013 2:00PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of OvaScience Inc. , a life sciences company focused on developing therapies to treat female infertility, plummeted as much as 36% after announcing the suspension of U.S. trials for its lead drug candidate, Augment, which is a drug designed to improve egg quality and increase the success of in vitro fertilization, in the United States.
So what: The reason behind the U.S. trial halt relates to an untitled letter received from the Food and Drug Administration. If you recall, an untitled letter is a notice of violations from the FDA, but not of the level of receiving a warning letter -- consider it a jumping-off point for discussion between the company and the FDA. According to the FDA's untitled letter, the agency is questioning the status of Augment as a 361 HCT/P (an FDA regulation governing human cells, tissues, and cellular and tissue-based products) and is advising OvaScience to file an investigational new drug application for the therapy. OvaScience also announced that it would be continuing its study outside the United States and anticipates discussing the FDA's Augment findings with the agency in the coming weeks.
Now what: As usual, now it's a watch-and-wait game for shareholders. Obviously, the U.S. represents a big market opportunity for OvaScience, so any delay in bringing this new drug candidate to market is bound to work against its share price. Then again, even with the delay, OvaScience's solution is still a remarkably easy fix -- simply file an IND for Augment and go through the motions as a worst-case scenario. Clearly not all hope is lost here, but I'd likely suggest sticking to the sidelines until after OvaScience and the FDA meet and discuss the FDA's concerns.
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The article Why OvaScience Inc. Shares Tumbled originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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