Please ensure Javascript is enabled for purposes of website accessibility

Why Sesen Bio Stock Bounced Back Sharply Today

By Eric Volkman – Aug 17, 2021 at 5:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Some investors clearly believe all is not lost with the company's leading pipeline drug.

What happened

One day has made a huge difference for the stock of Sesen Bio (SESN 4.67%). On Tuesday, the shares blasted almost 24% higher (albeit from a low base of $1.22 per share), a day after cratering by 42%. What in the world is going on with this volatile stock?

So what

Monday's steep dive was due to the Food and Drug Administration, which told Sesen Bio that it would not be approving the company's Biologics License Application (BLA) for bladder cancer drug Vicineum. The stock sell-off made perfect sense, considering that Vicineum is part of every Sesen Bio pipeline program, either alone or as part of combination therapy.

Medical professionals conferring in a hospital lobby.

Image source: Getty Images.

Investors have a tendency to overreact to strongly positive or negative news, and today's recovery appears to be a bounce back from Monday's fire sale.

A big reason could be that the FDA's notice isn't necessarily the end of Vicineum; according to Sesen Bio, the regulator provided recommendations for additional information that might ultimately win approval for the drug. Obviously encouraged by this, the company said it plans to request a meeting to earn Vicineum a fresh chance.

Now what

So ultimately this feels like a "not much to lose here" situation. Given the extremely low share price, investors might be calculating that any potential upside with Sesen Bio outweighs the modest losses they might suffer if a revised Vicineum BLA from the biotech fails. After all, the drug certainly has potential (as it targets a very challenging type of cancer), and the company holds the rights to it in most parts of the world.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sesen Bio, Inc. Stock Quote
Sesen Bio, Inc.
SESN
$0.56 (4.67%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
351%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.