Double negatives on SPPI this morning pre-market. The company announced that they are acquiring Allos Therapeutics (ALTH) for ~$200M. ALTH has a drug on the market (Folotyn) for the treatment of lymphoma so it seems like a good fit for SPPI. One would expect the acquirer’s share price to take a hit on news of an acquisition. Compounding this is the news that SPPI’s developmental candidate, apaziquone, failed to meet its endpoints (statistically significant difference in the rate of bladder tumor recurrence at 2 years) in two trials. As a result of these two developments, the stock price is currently down 12% – the portfolio is down 3.5%.
I have held SPPI for a long time and am continuing to hold. I have managed the risk differently compared to my other positions – and this is probably a learning point. On my other, catalyst driven, positions I have a very defined point of maximum pain. I move my stops (mental) when certain gains are achieved. With SPPI I did not follow this approach. Had I done so I would have exited somewhere in the mid $14’s. I would also not have held through the announcement of trial results.