These 3 Stocks Fell Like a House of Cards

While the Dow Jones Industrial Average was soaring 116 points higher yesterday on the surprising strength exhibited by the housing market, the three companies below were falling like the big bad wolf was at their door blowing their houses down.

Now, don't go running over the cliff with them like a bunch of lemmings; their double-digit losses could just be a temporary situation. Let's first see whether they had good reason to fall, as panic-fueled routs can sometimes lead to excellent buying opportunities.

Company

% Change

Titan International (NYSE: TWI  )

(15.2%)

Peregrine Pharmaceuticals (NASDAQ: PPHM  )

(13%)

VIVUS (NASDAQ: VVUS  )

(12.3%)

Where the rubber meets the road
Maurice "The Grizz" Taylor, CEO of tire manufacturer Titan International, created a bit of a sensation last week when he scoffed at the French for trying to finagle a deal for Titan to take over Goodyear's operations there. "How stupid do you think we are?" he asked. "The French workforce gets paid high wages but works only three hours. They get one hour for breaks and lunch, talk for three and work for three." He summed up his feelings by telling France's industry minister, "You can keep the so-called workers." 

While I'll admit to feeling new respect for the feisty, no-nonsense CEO, you've got to imagine the French feeling a bit smug after Titan reported revenues and earnings that came in below analyst expectations. Slowing construction in Europe, an Italy rocked by three earthquakes, and labor contract disputes with its three U.S. tire plants all conspired to underwhelm the market. Then, again, you can understand why The Grizz was unwilling to take on another troubled market. 

No doubt he did nothing to endear himself to his own workers by saying he would go and buy a Chinese or Indian tire manufacturer and pump out low-cost tires to sell to France. It seems to be one of those instances where speaking your mind makes you feel good for a moment, but likely does nothing to better your position. If Titan actually makes good on its promise, France has threatened to inspect its imports with a fine-tooth comb. One can imagine that they'll find any reason to reject them. 

Still winging it
There was no new company-specific news yesterday to account for Peregrine Pharmaceutical's 13% plunge, but an article appearing on Seeking Alpha suggested it was time to "throw in the towel" on the biotech's pancreatic cancer therapy bavituximab. The main thrust of the article was that after years and years of study and clinical trials, Peregrine has been unable to establish a statistically significant improvement over current care options.

Indeed, recent phase 2 results for the drug showed bavituximab offered only "modest" median overall survival improvement, so where it should take the drug next remains a bit of a head scratcher. There have been other problems with its results, as well, and, as I said a little over a week ago, "I'm more convinced that the company will have an increasingly difficult hurdle to get over." Some diehard investors excoriated me for that view, but it's up to Peregrine to prove it has something worthwhile that up until now has been nothing short of a disappointment.

Fat chance
Considering Americans are a bunch of obese couch potatoes, you'd think a fat-burning drug like VIVUS's Qysmia would resonate well with doctors and the public, but sales results since the FDA approved the treatment last year have been discouraging. Although they're on their rise, VIVUS has only filled about 57,000 prescriptions since its Sept. 17 launch. Europe is also questioning its safety, and wants further tests completed before it will approve the drug.

Analysts have been critical of VIVUS's marketing of Qysmia, which is only available by mail order, and has suffered from a lack of insurance reimbursement and high co-pays. While it has an application in front of the regulatory agency to permit a limited number of pharmacies to sell the weight loss therapy, a decision isn't due till April. In the interim, it's been trying to bolster sales with free trials for prospective patients , which really sounds a lot like those late night infomercials, or the email spam touting Canadian mail order drugs. As analysts suggests, VIVUS needs to significantly bolster its marketing plan.

It's a disappointing outcome for a drug that held such promise during clinical trials, but, with Arena Pharmaceutical's Belviq also meeting resistance, the only thing shedding weight has been their stocks.

Ready for a resurrection

Is now the time to sell VIVUS?
VIVUS' shares were clobbered after Qsymia's dismal launch. Investors everywhere are wondering whether the tide will turn for this fledgling drug maker, or if now is the perfect time to sell. In a new premium research report, the Fool's top health-care contributor breaks down this complex story and explains the details VIVUS investors must know -- including reasons to buy and sell. To find out more about this premium report -- complete with a full year of free updates -- click here now.



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  • Report this Comment On March 01, 2013, at 4:03 AM, BSDetector wrote:

    It appears that Seeking Alpha & yourself received completely different from the rest of the world with regard to Peregrine's news one week ago. The news we heard was incredible.

    Stocks typically do fall HARD when a company announces great news and institutions were holding no position to speak of. Let us know when the actual news reaches your office.

    $6+ in a few short weeks. Count on it.

    Owner since 0.80

  • Report this Comment On March 04, 2013, at 11:35 AM, RHSadvisors wrote:

    Nice piece.

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