Want to buy a dollar for $0.80? Sure you would, but as with anything that looks too good to be true, there's a catch.
But yesterday, it closed with a market cap of less than $80 million. The reason for the discrepancy? Like all companies, investors are anticipating the future value of Nabi when they think it will have burned through some of that cash on a worthless pipeline.
Nabi announced yesterday that its first phase 3 trial for NicVAX failed. The nicotine vaccine is supposed to help patients stop smoking, but the approximately 11% of patients that stopped smoking after taking NicVAX was similar to those that got placebo.
Another trial is scheduled to read out at the end of this year or early next year. But considering the first failure and a similar flame-out by a vaccine being developed by Cytos Biotechnology and Novartis
Even under the best case scenario where Nabi gets a Christmas miracle, I doubt the company could gain FDA approval with just one positive trial. If InterMune
Another trial would take well over a year to enroll and run, and working from a 50% success rate, there's no guarantee of a positive result on the third trial. Nabi's partner GlaxoSmithKline
There could be value left in Nabi -- including royalties from the aforementioned Phoslyra -- but the ifs and the waiting will keep me from buying at this point.
Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Click here to see his holdings and a short bio. The Motley Fool owns shares of GlaxoSmithKline. Motley Fool newsletter services have recommended buying shares of GlaxoSmithKline and Novartis. Try any of our Foolish newsletter services free for 30 days. 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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