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Why Teligent Inc. Plunged 18.5% in February

By Brian Feroldi – Mar 7, 2016 at 4:35PM

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Shares tumbled despite the company reporting two positive developments during the month.

Image source: stevepb via Pixabay.

What: Shareholders of Teligent (TLGT), a small-cap specialty generic pharmaceutical manufacturer, had a rough February as the company's stock dropped 18.5% during the month, according to data from S&P Global Market Intelligence.

So what: It's a bit of a mystery why shares plunged so much as the healthcare sector in general held up quite well over the same time frame. For example, the Vanguard Health Care ETF (VHT 0.28%), an exchange-traded fund that holds 345 stocks of all sizes that operate in the healthcare sector, only dropped by 0.80% during the period.

TLGT Chart

With such a big hit to the share price, you might assume that something bad happened at the company, but in fact, Teligent actually shared two pieces of good news with investors during the month:

  • On Feb. 2, the Food and Drug Administration approved the company's ANDA for a generic version of Lidocaine Ointment USP 5%. Data from IMS Health indicates that this is product has an addressable market of roughly $327 million in the U.S. and management expects to have the product on pharmacy shelves before the end of the first quarter.
  • On Feb. 26, Teligent won FDA approval for Desoximetasone Ointment USP 0.25%. This approval came only 15 months after the compound being submitted for regulatory approval and the product has an addressable market of approximately $17 million. Teligent plans to begin selling the ointment sometime during the second quarter. 

Beyond the news of these two approvals, SEC filings revealed that several investment funds either initiated a new position or added to their existing stake in the company's stock during the month.

And yet, despite everything listed above, the stock still tumbled.

Now what: Teligent currently counts 12 products on the market that are offered to its patients in a few dozen formats, and another 31 products in its pipeline are currently pending regulatory approval. All told, it estimates that current backlog of products have an addressable market opportunity worth roughly $1.4 billion. 

Fourth-quarter earnings results will be released this Wednesday after the market closes, and it has surprised investors on the upside in three of its last four reports. If the company can do so once again, it wouldn't surprise me to see the stock recover from the drubbing it took in February and start heading in the right direction again.

Brian Feroldi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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