La Jolla Pharmaceutical Company (NASDAQ: LJPC) is having an incredibly rough day in the market today, leaving many scratching their heads. The company released a business update that seemed to be positive this morning before the stock started to slide. So, what’s the deal? Today, we’ll talk about:
- Why LJPC is tanking;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
Here’s What’s Going On With LJPC
As mentioned above, La Jolla Pharmaceuticals is having an incredibly rough start to the trading session today after what seemed to be positive news. In a press release issued early this morning, the company released a corporate update. Key points of the update included:
- Q4 Sales – The company said that net sales of GIAPREZA for the fourth quarter came to approximately $4.2 million. That figure is up 20% over the figure from the third quarter.
- Full Year 2019 – The company said that in the full 2019 year, it is expecting for net sales to come in the range between $24 million and $28 million.
- EMA – LJPC also said that it is expecting for the decision from the European Medicines Agency (EMA) to come in June of this year, giving investors a catalyst to look forward to. Considering the fact that the FDA has already approved the treatment, this decision is likely going to be a positive one.
- New NDA – The company also said that it is planning on submitting a New Drug Application (NDA) to the FDA for LJPC-0118 in the fourth quarter of this year. The treatment is under development as an option for severe malaria.
- Coming Results – Finally, the company pointed to expectations of topline results from two clinical studies. The first, a Phase 2 study of LJPC-401 in patients with hereditary hemochromatosis is expected in the second half of this year. The second, a Pivotal Study of LJPC-401 in patients with Beta Thalassemia is expected to produce topline data in mid-2020.
In a statement, George Tidmarsh, M.D., Ph.D., President and CEO at LJPC, had the following to offer:
We are excited to have launched GIAPREZA, our first commercial product, in 2018. We believe that GIAPREZA has the potential to help many patients suffering from septic or other distributive shock, and we have a number of initiatives that we believe will support its continued, increased adoption in 2019… Our two randomized studies of LJPC-401 in BT and HH have the potential to demonstrate improved patient outcomes in these important diseases. Furthermore, we are excited to announce a planned NDA submission for LJPC-0118, our new investigational product for the treatment of severe malaria, in the fourth quarter of 2019.
So, Why Is The Stock Down?
With such positive news ot of La Jolla Pharmaceuticals, why is the stock tanking in the market today? The answer would be speculation as there is no fundamental change that would lead to a massive decline like this. Nonetheless, in my view there are a couple of factors playing in here:
- Big Money Short Interest – First and foremost, the short percent of the float here is over 40. That’s a big issue, showing that the big money is expecting declines ahead. Today, shorts are taking control, and the bulls are taking a hit.
- Finances – At the moment, the company is burning through around $50 million a year. That’s painful, especially considering that guidance for 2019 in terms of revenue only account for just over half of that loss. Sure, the company is in a relatively strong position as far as assets, but with guidance being so far away from a potential profit, investors may be looking for an explination.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. In the case of La Jolla Pharmaceutical Company, the news looked positive, but investors are having a negative reaction. As is normally the case, our partners at Trade Ideas were the first to alert us to the declines. Currently (12:38), LJPC is trading at $6.04 per share after a loss of $4.48 per share or 42.56% thus far today.
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A Potential Opportunity
While the shorts have control over LJPC at the moment, this decline could represent a strong opportunity. At the end of the day, the company outlined several catalysts ahead. Any of these have the potential to lead to a reversal. Also, with today’s declines in mind, La Jolla Pharmaceutical Company is incredibly undervalued and trading just above support at $6 per share. At the end of the day, the great Warran Buffet made a name for himself buying when fear was high and selling when greed took control. This may be an opportunity to do just that!
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