Why Pharmacyclics' Shares Plunged

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

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 biotechnology company Pharmacyclics (Nasdaq: PCYC  ) shed as much as 19% following the company's release of disappointing clinical data, as well as its first-quarter earnings results.

So what: For the quarter, Pharmacyclics reported a huge jump in revenue, to $102.7 million from just $37,000 in the year-ago quarter, largely due to a $100 million milestone payment from collaborating partner Johnson & Johnson (NYSE: JNJ  ) . Pharmacyclics also earned $1.02 per share. But investors predominantly ignored these figures and focused instead on an early multiple myeloma study in which its lead drug Ibrutinib, a BTK-inhibitor, failed to provide tumor shrinkage at a 420 mg dose, although it appears to have had some success in slowing disease progression. Pharmacyclics plans to test the drug at higher doses.

Now what: As I've been saying for more months, if we're going to place a $3.5 billion valuation on a biotechnology company that doesn't have a drug approved by the Food and Drug Administration as of yet, it had better make me breakfast in bed! Today's news isn't a death knell to Pharmacyclics, but it's a reminder that investors should keep their expectations in check. It's true that few companies possess a unique pathway product like Pharmacyclics' Ibrutinib, but it's also going to need to show that the drug is both extremely effective and safe if it's going to maintain this frothy valuation. As for me, I'm not going anywhere near Pharmacyclics.

Craving more input? Start by adding Pharmacyclics to your free and personalized Watchlist so you can keep up on the latest news with the company.

Editor's note: A previous version of this article referred to the Ibrutinib trial as having 420 patients. The correct patient number was 13. The Fool regrets the error.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2096066, ~/Articles/ArticleHandler.aspx, 10/22/2016 12:22:47 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 15 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
PCYC.DL $0.00 Down +0.00 +0.00%
JNJ $113.44 Down -1.43 -1.24%
Johnson and Johnso… CAPS Rating: ****