Almost all of my losing positions are in tax-advantaged accounts of one kind or another (401K or IRA), and while some of those may deserve to be sold, there's no particular reason to sell them at the end of the calendar year. I have six stocks in the portfolio that are down more than 5% or so, including all three of my most speculative positions: the bulletin board companies Cryo-Cell (OTCQB:CCEL), SpaceDev (OTC:SPDV), and MMC Energy (MMCN.OB), as well as Chico's (NYSE:CHS) and Imax (NYSE:IMAX). Those five are all in IRAs.
But I do have one holding that I could sell for a tax loss this week. CV Therapeutics (CVTX) is held in a taxable account, and it is certainly down (my position is in the red to the tune of about 34%). So should I sell it?
I haven't written much about CVTX lately, but I bought the shares on the promise of Ranexa (Ranolazine) as a potential new front-line angina treatment to compete with the sometimes ineffective beta blockers and such that have been in use for decades. And here's where it gets interesting: CVTX is down dramatically because they have not yet gotten approval for Ranexa as a front line treatment, and because sales of Ranexa for patients who have already tried other treatments started extremely slowly this year when the drug was approved for that much smaller market.
So that slow takeoff might mean that cardiologists just don't like the drug, in which case CVTX has a long slog ahead even if they do get an expanded label for the drug. Or it might mean that the doctors are waiting for the completion of CVTX's expanded MERLIN trial, which has been delayed a bit already, before they start prescribing Ranexa.
The MERLIN trial is underway now to examine the potential for Ranexa as a front-line treatment, and to use as an argument for the FDA for an expanded label to dramatically expand the sales potential of the drug. Essentially, an investment in CV Therapeutics is a bet that the MERLIN trial will back up CVTX's safety claims and give them a huge market to sell Ranexa into, because they don't have much in the way of other promising drugs in their pipeline.
So I'm thinking that this one probably makes sense as a tax-loss sale, even though I do think Ranexa has some great potential (and is moving forward a little faster in Europe, which is promising). Why? Because it's going to be months before we hear important news from the MERLIN trial, so I have plenty of time to sell now and buy back after 30 days if I still have that inclination, with certainly no catalysts expected in the next month or so.
Of course, I could always be surprised; news could leak, either good or bad, from the MERLIN trial, or a new drug could be discovered to have great potential in their very thin pipeline, or cardiologists could suddenly fall in love with Ranexa and spike prescriptions higher in the short term. Or someone big could buy the company. While those are certainly possibilities, I consider them all remote, and especially remote in the next month, so I'll be taking a tax loss in CVTX and reconsidering at the end of January whether I want to re-open a position.
Full disclosure: I sold my shares of CVTX at $14.01 Thursday morning. As of this writing, I still hold all the other stocks mentioned here.
CVTX 1 yr chart