wretchedturkey's  Instablog

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Just learning the ropes and soaking in as much as I can. I'm a Chartered Professional Accountant (Canadian CPA) with an eye for catching misunderstandings and inaccuracies in comments/articles; particularly as it pertains to accounting and taxes. I would classify my investor profile as 70%... More
  • What Is CHTP Hiding? 0 comments
    Dec 8, 2012 8:36 PM | about stocks: CHTP

    Whenever a stock drops a significant % in one fell swoop it is a time to reflect. And there is no better time to do it than December and the renewal of a new year.

    Many commentators of CHTP have been marginalizing the recent stock plunge brushing it off as nothing more than a bad bout of tax-loss selling or a mere fall back for recent 'unexplained' surges in the shares.

    These are valid arguments especially when you consider the fact the stock was at $5 & change per share and had fallen to $1/sh. Many investors may have simply been locking in their losses all the while recouping ~20% of their losses ($5 to $1 and then regaining to just under $2).

    There are others that have argued that its all a stupid political game of cat and mouse with the FDA and the recent plunge was merely an aberration of recent uninformed investors buying in and then selling out when the unexpected news conference was given on Dec 4th. Sorry but you got to be an imbecile to think this.

    Come on, what about the huge white elephant in the room? The FDA announced right from the onset that the 306b study would not be enough without a longer time frame. So why in the world did CHTP management go ahead with the study with a timeframe not in line with the FDA's request?

    You know what is political? When you do what is asked from the FDA, you get the results you hoped for (or close to it) and you still don't get approval. Then the argument of "oh, its just ridiculous politics at the FDA" holds some water. But when they say something and you specifically don't follow their guidance? That's either just plain lazy or perhaps worse, something sinister is behind it. Why didn't management just do what was requested? When the name of the game is to grovel at the feet of FDA and follow their guidance to the letter - just put up with it and do it. But what worries me, and what should worry other investors - granted, its probably just insiders and myself at this point; all rational investors probably pulled out - is that (1) management chose specifically to go against the wishes of the FDA by doing a 4 week study instead of a 4 month study and (1) release the news very unexpectedly without prior warning or notice.

    While the chances of approval eventually are still strong and the market for the drug appears to be healthy and all the underlying fundamentals are still more or less unchanged, I hope I'm wrong when I say this (since I'm still long after all) but is management worried of something negative developing and therefore require being reported if they do a longer term study? I don't want to really create fear mongering and say it must be so but at least consider it in your risk analysis overall strategy for CHTP moving forward.

    And regarding my 2nd concern, why would anyone announce news so unexpectedly? Don't they realize that ANY shock or surprise to the markets turns out badly unless its good news on top of good news? If there is even a shred of negativity then it ends up hurting the stock price. Maybe management simply miscalculated in thinking that investors would react to their announcement with relief and reward the stock with the good news they gave. I hope that's all it is.

    Anyways, either way the ineptitude of management is staggering and perhaps they will roll up their sleeves in 2013 and do whatever they need to get this done.

    Disclosure: I am long CHTP.

    Stocks: CHTP
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