When the calendar flips from December to January, many people like to start the year with a clean slate…
They swear off junk food and promise to exercise more. They declare they won't waste their evenings on reality TV, making a promise to themselves to read more. And finally that they will dump their losing stocks and instead only buy quality names.
Let me give you that little push that you may need. I can't help much if you're addicted to Haagen-Dazs and Mob Wives…
But if you own any of the following three stocks, sell them immediately.
"Hung" up on Medivation
San Francisco-based Medivation (Nasdaq: MDVN) has a promising drug for prostate cancer – MDV3100. In Phase III trials, advanced prostate cancer patients lived an average of 18.4 months versus 13.6 for patients on placebo.
The stock is up 200 percent from when the data was released just over a month ago, giving Medivation a market cap of $1.7 billion.
The company should provide more information next year as to the path to regulatory approval. Meanwhile, Medivation and partner Astellas Pharma are currently in an additional Phase III and two Phase II trials.
My problem with Medivation is two-fold:
- Its current market cap is 25-percent greater than Dendreon's (Nasdaq: DNDN), which already has a prostate cancer drug on the market. Granted, initial sales for Dendreon's Provenge were disappointing, but there's a very big difference between weaker than expected sales for a drug that has already been approved versus one that hasn't been given clearance by the FDA yet.
- The second issue is with Medivation CEO David Hung. I'm very familiar with Hung and Medivation, having covered the company when data for its Alzheimer's candidate Dimebon was very encouraging.
The drug produced stellar Phase II results only to fail miserably in Phase III. Hung is a smooth talker and oozes confidence – a little too much confidence in my opinion. Successful biotech CEOs tend to be cautiously optimistic by nature, not boastful.
When there was tremendous buzz about Dimebon, Hung became a rock star at investing conferences, once telling me, "I've made a lot of people (investment managers) heroes."
Before you think this is sour grapes, you should know that my subscribers took big gains on Medivation during the Dimebon run-up and eventual fall.