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 the topical and ophthalmic generic drugmaker IGI Laboratories (TLGT) lost over 30% of their value today on extremely high volume as a result of a fairly disappointing first-quarter, as well as a revised (and particularly gloomy) outlook for the second-quarter. Specifically, the company reported total revenues of $10.7 million for the three-month period, missing consensus by $1.7 million or 13.7%.
Most importantly, though, CEO Jason Grenfell-Gardner noted in the press release that sales of the company's econazole nitrate cream products are expected to decline markedly in the second quarter, driving estimated revenues for the quarter down to a range of $7 to $8 million. The Street, by contrast, had second-quarter revenue pegged at closer to $14 million.
So what: IGI has been an amazing turnaround story over the past two years, with shares climbing nearly 900% at one point. Since reaching their apparent zenith in the $12 range, however, shares have steadily fallen back to Earth, reflecting the problems associated with cobbling together a product pipeline consisting mostly of older products with multiple manufacturers around the globe.
Now what: Looking ahead, management is pinning its hopes on IGI's collection of twenty-four ANDAs now on file with the Food and Drug Administration to help build shareholder value. Per the company's press release, these ANDAs are worth an estimated $702 million in potential revenues, which would be a major boost for a company that probably won't generate even $40 million in sales this year.
Unfortunately, the queue for ANDAs is notoriously long, with review times often exceeding two years. That's why you may not want to try and catch this falling knife today -- or anytime soon for that matter.
