After soaring from sixty cents to over three dollars per share in the timespan of a few days, Antigenics (AGEN) was trading for under two dollars during early training on Monday morning.
Drops such as this one tend to induce a fair amount of selling from 'weak hands', or those that knee-jerk their sell orders at the first sign of trouble, but this is a buying opportunity that the long term investor should not miss.
Last week I wrote the following in a post regarding AGEN's debt re-payment with Tang Capital Partners:
Antigenics entered into a Securities Exchange Agreement with Tang Capital Partners, LP, where the company exchanged 4,028,838 shares for over twelve millions dollars of debt, including accrued and unpaid interest.
What is significant about this deal is the relatively few amount of shares offered, (4,028,838) for the amount of debt owed ($12,442,000). That equates to approximately $3.08 per share on a day that saw the stock close for under three.
It's highly unlikely that Tang Capital accepted those terms with the intention of shorting the shares because, with the positive news that has been released of late, the downside of the stock is minimal compared with the potential upside.
More likely, Tang is confident in the potential of Oncophage and Antigenics' ability to take the groundbreaking kidney cancer vaccine to market outside of Russia, where it is already approved.
Revisiting my statements, I now believe that Tang decided to initially utilize their shares to take a short position in the stock. With more than a dollar drop from the $3.08 price that they paid for their shares, Tang has had the opportunity to make some pretty good short-term cash. That's the life of the big boys.
For the small investor, nothing has changed with Antigenics. The evidence still shows that Oncophage works and the company is still preparing for a launch of the product in Russia later this year.
The fact that the stock has dropped just means that confident long term investors have the opportunity to buy for more than 30% less than they did last week.
Don't panic, just HOLD.
Disclosure: VFC is long AGEN, and buying more below two bucks.