Send me real-time posts from this site at my email
Motley Fool

Why RedHill Biopharma Stock Is Getting Crushed Today

What happened

Shares of the specialty biopharmaceutical company RedHill Biopharma (NASDAQ: RDHL) are down by an eye-popping 33% as of 10:53 a.m. EDT Tuesday morning. The drugmaker's stock is tanking today in response to the performance of opaganib, a sphingosine kinase-2 selective inhibitor, which failed to hit its primary endpoint in a phase 2/3 trial as a treatment for hospitalized patients with severe COVID-19 pneumonia.

Interestingly, the market appears to have anticipated this clinical failure, as evinced by RedHill's steady decline over the course of the past week. The company's stock, in fact, has now shed almost half of its value since Sept. 8.

Image source: Getty Images.

So what

While opaganib's COVID-19 indication probably wasn't going to be a huge moneymaker for RedHill (analysts expected roughly $200 million to $300 million at the peak from this indication), this sizable market may have had enough juice to transform the company into a profitable operation perhaps as soon as next year. What's important to understand is that Wall Street currently expects RedHill to be cash-flow negative until at least 2023 despite having three gastroenterology-focused medicines on the market.

Now what

Is RedHill's stock worth picking up on this latest pullback? There is a lot to like about this small-cap pharma stock, especially at these bargain-basement levels. RedHill's gastroenterology franchise -- consisting of Talicia for Helicobacter pylori infection, Movantik for opioid-induced constipation in adults, and Aemcolo for travelers' diarrhea in adults -- could garner sales in excess of $1 billion before the end of the decade. That's an enormous potential revenue stream for a healthcare company with a market cap of less than $250 million.

All told, RedHill's stock is likely to take a while to turn into a consistent winner. But there is enough latent value hidden within this tiny drugmaker to merit a deeper dive by healthcare investors with a long-term outlook.

10 stocks we like better than Redhill Biopharma
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Redhill Biopharma wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of August 9, 2021

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue