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The 5 Dumbest Things on Wall Street This Week: Sept. 13

Stocks in this article: DELLFSLRRICKOVASYHOOMSFTHLF

Ova And Out

Note to the geniuses at OvaScience (OVAS): Overlooking the FDA when launching a new drug is generally not a keen idea. In fact, it's overwhelmingly dumb.

The biotech company's stock was overrun by sellers Wednesday, sinking over 21% to $11 after the company said federal regulators are inquiring about the status of its fertility treatment Augment. The FDA instructed OvaScience to file an investigational new drug application for the product, which would require additional rounds of testing and will likely keep Augment off the U.S. market for years.

In a press release, OvaScience announced it was suspending enrollment of Augment trials in the U.S. while it has further discussions with the FDA. In the meantime, the company said it is moving forward with plans for enrollment outside of the country.

Put simply, OvaScience believed Augment was a cellular- and tissue-based product, also known as a 361 HCT/P, and, as such, could be marketed commercially without FDA oversight or review as drug. As a result, the company -- knowingly or unknowingly -- neglected to ask the FDA if it agreed with its characterization of Augment and proceeded until the FDA shut it down.

Or, in even simpler terms, OvaScience tried an end-around, but its FDA overlords put an end to it.

Worst of all, the company's stock was in overdrive prior to its being sucked under. OvaScience shares closed Tuesday at $14.28, up more than 70% for the year. Also, just last week Wedbush analyst Zarak Khurshid initiated coverage of the company with an "outperform" rating and a $20 target. That very same day, the company's CEO Dr. Michelle Dipp triumphantly rang the opening bell at the Nasdaq.

We have a feeling that Khurshid is thinking that OvaScience outperform over right now. Don't you think?

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