Sudden drop in Cell Therapeutics, Inc. (CTIC) result of prank?
Today's Financial News - Posted September 4, 2009
Cancer drug maker Cell Therapeutics, Inc. (NASDAQ:CTIC) saw its shares plummet today after a mysterious posting popped up on Google message boards. We were in for the ride!
by J. Christoph Amberger
Baltimore, MD — TFN: There was some incredible action on Cell Therapeutics, Inc. (NASDAQ:CTIC) today.
The company develops and commercializes treatments for cancer.
Laura Cadden had recommended this stock to Hot Stock Confidential members on August 20 in view of some upcoming FDA announcements. Thanks to the long weekend, I found myself minding the store by myself today. Having received specific instructions not to take my eyes off CTIC this morning, I watched the stock gain 1.3%, 1.5% over yesterday’s close:
Laura was convinced we had a fighting chance at bagging double- or even triple-digit gainer #56 today for HSC members!
Then, suddenly, the shares fell off a cliff. 5 million shares dropped, erasing 20% of the stocks valuation in seconds.
The only thing missing in the chart were cartoon lemmings falling off that cliff!
What had happened? There were no news out… only the Google message boards had an entry: “Cell Therapeutics (Nasdaq: CTIC) said today that the FDA has denied the drugmaker its request for a priority review of its experimental cancer drug Pixantrone. Pixantrone now faces a standard 10-month review, instead of the six-month review usually granted under a priority review. A priority review is often only granted to new treatments when no drugs are available for a particular illness. However, Pixantrone’s rivals may make it to the market before or around the time of the FDA action. CTIC expects a Pixantrone action date by the FDA in summer 2010.”
Innocuous. Realistic. Plausible. Or so I thought until I saw the price increase just as steeply.
Then it dawned on me. Someone was having a little too much fun with the message boards!
Among the hundreds of new thread on CTIC that suddenly sprung up, one caught my eye: “To All the Idiots that just sold their Shares”: Thank you very much—you are all gems. Got in big at $1.28.
The company itself moved like molasses: By 1:30PM, they had neither posted a rebuttal, new news — let alone returned my phone calls to their investor relations guru.
Here’s what Laura originally wrote back in August: “Now what’s at stake here is not complete FDA approval of a drug, but instead the acceptance of priority review. If this is awarded, then the actual FDA approval decision date will be December 24. Pixantrone has already received FDA fast-track status for the treatment of relapsed or refractory aggressive non-Hodgkin’s Lymphoma (NHL). Patients treated with Pixantrone have a higher rate of confirmed and unconfirmed complete remissions compared to those who received standard chemotherapy treatments. The clinical uses of Pixantrone could include non-Hodgkin’s and Hodgkin’s lymphoma, acute leukemia, breast cancer, and multiple sclerosis.
“The potential profits if this drug goes to market could be more than $1 billion.
“This stock had a 52-week high of $3.20 but its potential is huge. Already yesterday, the stock rose 10% on expectations of success. This isn’t the only promising drug in CTI’s pipeline, but it is its gravy train candidate right now. Just based on this one drug — if all goes well — we should be able to bank nice gains by the end of the year… perhaps even next week. I recommend you buy shares of Cell Therapeutics Inc. (NASDAQ:CTIC) at or under $1.75 and hold on for 30% gains or more.”
For today, the company expected to receive the action date and a final decision on review status.
By 1:33PM, the share price was back to near-breakeven over yesterday’s closing price.
There are two lessons to be learned from this:
#1: Don’t believe everything you find posted on a message board… especially if it sounds plausible.
#2: Don’t apply automatic stop loss provisions on speculative positions!
We remain in the stock and await a call back from the company! They have a lot of ’splaining to do…
Next Article: TFN eNews 09/04/2009: WTF CTIC! This was supposed to be a quiet day
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September 6th, 2009 at 1:29 pm
Christopher,
Very fun reading your analysis. Have you considered the possibility that what really happened was that that some one “just having too much fun” deliberately tanked the price per share with his bogus pr and then actually bought, according to the Google Board posts and my subsequent calculations 180,000 shares at $1.21 and then sold at the top – around $1.50 to net around $45,000.00 in profit within the span of about two and a half hours?
This absolutely can, and likely did happen, just the way I’ve laid it out. Some people that were paying attention, are absolutely thrilled, because it gave them a nice low entry point if they bought at the right time.
No real damage done, right. The pps is back to where it was before. Crafty, yes – legal not even in your wildest of wet dreams…
These are the unpredictable waves of the market, roll with them and maybe profit or get soaked…