Aralez Shares Stabilize Following 17% Drop

Aralez Pharmaceuticals Inc ARLZ is experiencing some wild trading in Wednesday’s session ahead of an anticipated FDA decision on Yosprala sometime today. The stock plummeted as low as $4.78 on Wednesday morning, triggering a temporary halt on trading. Once shares resumed trading, the stock stabilized a bit and is now down 7.6 percent on the day.
 

Yosprala, which helps with prevention of cardiovascular disease in patients at-risk for aspirin-induced ulcers, is expected to gain FDA approval and hit the market as soon as Q4. Anticipation of Wednesday’s ruling had driven shares of Aralez up more than 70 percent in the past three months. In fact, the bog move is likely the cause for Wednesday morning’s sell-off, with traders cashing in on big gains ahead of the ruling.

Related Link: Biggest Threat To The U.S. Economy? The Presidential Election

Selling ahead of a potential bullish news catalyst is a strategy that is often employed by traders, especially when the news event is as highly-anticipated as an FDA ruling. If the market assumes a drug will gain approval, biotech stocks often have limited upside remaining in the event of good news. That leaves the primary risk to the downside in the event of an unexpected negative ruling.

Despite the huge run-up in recent months, Aralez’s stock is down 18.0 percent year-to-date.