Editor’s note: This article was first published in August 2013; the share moves it reports for Navidea and Acadia and the IBEX 35 correction it mentions reflect market conditions at that time. This describes a speculative personal trade from August 2013. Small biotech stocks are highly volatile; this is not investment advice.
Yesterday I reported some changes to my investment portfolio, in which I got rid of some stocks ahead of a possible severe correction in the index (which has now happened, and my stocks would have been among the hardest hit). I also announced that I had invested part of the profits in a US biopharmaceutical company, Navidea Biopharmaceuticals, with a long-term view.
To my surprise, the stock got quite a lot of media coverage today, and I found that it had closed with gains of more than 5%, while in after-hours trading it is up another 8.70%.
While the IBEX correction was more predictable, in Navidea’s case, let’s not kid ourselves: it was pure luck. Still, the market has probably seen exactly what I saw when I bought into this company: it is expected to have a good run on the back of the approval of its drugs for two diseases that are very much in the spotlight today, cancer and Alzheimer’s, as well as other drugs in late-stage trials.
Although pharmaceutical companies are rarely free of big risks in the markets, it is also true that picking one with a high-selling drug that has been undervalued can make it worthwhile in terms of risk and return.
Take Acadia, for example, another pharmaceutical company that some people knowledgeable about “medical finance” advised me to buy last year. I didn’t pay much attention. The company went from $1.77 a share to $19, and that’s a return of more than 1,000% that I missed.
Will we be that lucky with Navidea? I don’t know, but we’re going to find out.
Featured image: CSIRO, CC BY 3.0, via Wikimedia Commons.



