What should we think about the bio stock price? / 4563:Anges

It is coming now! Anges!  My only experiences of bio-stocks are “Takara Bio” and “Anges”, so far.  I’m sorry to Anges, but Takara Bio is a good company. Profit is also steadily generated every year. 

On the contrary, Anges is full of suspicious. Even when I read the company’s financial statements, I still wonder how the company can survive because it continues to be in the red. 

It’s been in the red all the time… 

It’s been in the red all the time as quarter basis… 

For example, Investing to Anges is like…Your uncle looks like good financial situation. But it is not known what your uncle is earning. And he suggested you to invest some thing. Suspicious… It’s suspicious. If you will do well, you can get enough money in your life. He is relative, so he don’t cheat you probably. But suspicious… 

This time, I would like to write about my relationship with Anges and what I learned there. 

Breakthrough of Anges 

However, as of September 2020, Anges has  a hot topic these days. You can hear various news without having to look it up.   

—Joint development of next-generation vaccine for corona virus in collaboration with Osaka University 

—Adopted for the public offering project “Vaccine development for new corona virus infection” by Japan Agency for Medical Research and Development (AMED) 
—Started clinical trial of new corona virus vaccine 

—Announced that it has obtained a patent in Japan for a hypertensive DNA vaccine.   

—”Clinical development of DNA vaccine targeting the new corona virus (COVID-19) “is adopted in the second open call for participants of the Japan Agency for Medical Research and Development (AMED). 

Not only news topics but also stock prices are tricky. 

The figure below shows the changes in Anges’s stock price over the past five years. It is characteristic that it sometimes rises like a geyser. Isn’t it bio stock normal trend? The stock price suddenly doubles or triples and returns to normal. It is amazing. If you can buy and sell well, you will make a lot of money! I can’t! It’s impossible without God! 

It’s powerful that the stock trading volume become 10 times when you get attention! It may be typical of biotechnology stocks. From April to August 2019, when I owned Anges shares, the stock price was around 700 yen, but now it’s in the 2,000 yen range. 

Relationship between Anges and I

The soaring & plunging period that I experienced is the red dashed line in the figure below. In this way, the volatility of other periods is too large and my holding stocks period is within the margin of error… It’s “the bio stock” 

The encounter between Anges and I is “Collategene”. Collategene was highly expected as it was the first gene therapy drug developed in Japan. 

Therefore, I bought and picked up Anges stock from April to July, 2019. The average purchase price was 794 yen. Medical care and drugs in Japan are at official prices. The Minister of Health, Labor and Welfare has the right to decide this, but in reality the Minister of Health, Labor and Welfare must seek the opinion of the Central Social Insurance Medical Council (Chuikyo).  

The actual price will be decided at the Chuikyo. The drug price of Collategene was not decided at the Chuikyo on 22 May, 2019. It is thought to be the result of a conflict between a drug manufacturer who wants to raise the price of a new drug with high development costs as much as possible and the Ministry of Health, Labor and Welfare.  Collategene will aim to determine the drug price at the next Chuikyo on 28 August. After that, the stock price of Anges began to rise from around mid-August 2019. The stock price, which had been below 700 yen until then, hit a high of 965 yen on 27 August, and the closing price was 930 yen.  

If the drug price will be listed (decided) tomorrow, the stock price will soar beyond this… It may be over 1,000 yen, over 2,000 yen. I wonder if the stock price will be price upper-stop limit will be 3 days in a row… 

Anges will bring explosive profit to me. I’m glad I’ve put up with it all the time! I’ve endured it all the time since April! It’s amazing! What’s going on tomorrow? ”Honestly, Anges came out in my dream. So my sleep was shallow. Thanks to that, I wasn’t feeling well the next morning. 

When I woke up the next morning, it was still early in the morning, so when I looked at the PTS (private night trading of a securities company), I found that “Hmm … Is it down? Why? Something is wrong …”  And at 9 am, The Tokyo Stock Exchange has opened! “Eh !? Stock price plunges down with great momentum. But why? Why? The drug price has been decided. It’s the first gene therapy drug produced in Japan !!!” 

After all, the closing price was 780 yen, which was 150 yen lower (-16.1%) than the previous day. 

Looking at the news, it seems that the decided official price of 600,000 yen was cheaper than expected… It’s a disappointed sale. 

The expected number of patients receiving Collategene is about 1,000 and the sales amount is 1.2 billion yen. Looking at the investment cash flow of Anges, it is 1,249 million yen. There is about 10 billion yen in cash. It seems that not only Collategene but also other drugs are under development, but it might not be strange for some investors to be disappointed with the sales of 1.2 billion yen. 

The price continued to decline the next day and the day after next, The price plunged in a -40% in three days… 

 930 yen → 780 yen (-16.1%) → 660 yen (-15.4%) → 560 yen (-15.2%) 

I sold it all for 558 yen on 30 Aug. 

I didn’t know at this time, but I think now that the fall of Anges was not just because the drug price of Collategene was cheap. 

Why did the stock price of Anges plunge occur? 

The world of stock markets is fluctuating with expectations. Information that affects the stock price will be incorporated into the stock price in advance. In the case of Anges this time, if we look at the price movements in more detail, there are almost no noticeable price movements until mid-August. However, stock prices have begun to rise since mid-August. 

The drug price of Collategene was not listed at the Chuikyo on 22 May, 2019. The predominant view is likely to be listed on the next 28 August. Anyone who is looking at the news of Anges knew this viewing. 

Stock prices began to rise sharply in the next two weeks until the Chuikyo on 28 August. It was bought with the expectation that the drug price will be listed. 

The more people  expect to buy, the more energy can store to raise the stock price. And the drug price was actually listed. When the expectation is achieved by the announcement of the fact, the stock price will be reversed when the person who had bought until then turns to sell. The greater the stored energy, the greater the subsequent recoil. 

The stock price was listed. There is an idea that this is the best time to buy stocks. But on the contrary, I think that it is often the time to sell in the stock market. When the drug price is listed, that expectation has already been factored into the stock price, so it is difficult for the stock price to rise further. 

Let’s take the position of another person here. Can you newly purchase at this high price?  Perhaps there are more people who want to sell and get profit at this high price than those who buy new ones. 

There is a good chance that the stock price will rise further as drug prices are determined and Collategene‘s earnings lead to significant profit expansion. For example, if the drug price of Collategene is higher than expected. But the stock price often goes down due to the news that the good news is exhausted. 

The drug price decision of a pharmaceutical company is a good news. Speaking of good news is a good financial result. 

When expected good financial results have been announced, stock prices often plunge even with good financial results such as + 100% and + 150% year-on-year. 

This good financial result has already been factored into the phenomenon of rising stock prices, The achievement of the expectation that good financial results will be announced will cause the stock price to reverse and plunge. It’s a phenomenon that is too much in the world of stocks. 

This is the famous saying in the stock market, “Buy the rumor, Sell the fact.” 

In this time, the news about the drug price listing of Collategene was exactly same as this proverb. 

However, we would like to expect the stock price rise to skyrocket if the drug price is listed. I want to sell it after it soars… 

This time it was a sad story. At first, I thought that Anges brings good profit, but finally I lost a lot. I hope this story will be something help for everyone in the future. 

In the future, you will surely feel, “Oh, this phenomenon is same as he said.” 

Thank you for reading this time as well. 

Everyone, let’s make the stock balance absolutely positive! 

*This time, I mistook Collategene as Cotellagene until I wrote this article. The correct name is Collategene. I noticed when I was looking up the spelling in English… 

 

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