This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Targacept Selling is Just Silly: BioBuzz

WINSTON-SALEM, N.C. ( TheStreet) -- Targacept (TRGT - Get Report) announces a monster partnership for its depression drug with AstraZeneca (AZN - Get Report) this morning, yet the stock plunges when trading opened. Earlier this morning, Targacept shares were off 17%; the stock has now "recovered" somewhat and is only down 8% to $21.46.

Huh?

Chalk it up to a colossal sell-on-the-news reaction. Investors were expecting Targacept to come through with a partnership either before year-end or soon after. The fact that deal terms, including $200 million upfront and total milestone payments of $1.2 billion, were better than expected doesn't apparently count for much.

That AstraZeneca chose to spend major bucks to license TC-5214 but didn't buy Targacept outright at a big premium is also likely a disappointment for some investors.

And let's not forget that Targacept shares were up more than 660% since July when the company first announced the stellar data for TC-5214. With those kinds of returns in the bank already, a good number of investors are taking profits now that the AstraZeneca deal is done. That Targacept and TC-5214 now enter a relatively quiet period before the phase III studies begin next year doesn't help matters, especially with short-term oriented investors.

Last week, I pegged Targacept and TC-5214 as the drug with the best chance to be partnered on lucrative terms. I was right, but clearly, Thursday stock action wasn't what I was expecting.

The sell off today has reached ridiculous levels. It's really just silly. Targacept has something like $10 a share in cash, which means the market is valuing TC-5214 -- a potential blockbuster anti-depression drug entering phase III studies -- at only around $10-11 a share. Never mind that Targacept has a bunch of other drugs in its pipeline.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AZN $69.86 -1.30%
TRGT $2.39 0.00%
AAPL $131.46 -0.90%
FB $81.33 -0.71%
GOOG $553.51 -0.33%

Markets

DOW 18,070.79 +32.82 0.18%
S&P 500 2,105.45 -3.47 -0.16%
NASDAQ 5,045.7280 -14.5180 -0.29%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs