Why Ariad Investors should cheer, not fear, the Biotech Bubble deflation

Ok, it looks like the sky is falling for the biotech sector.  At least that’s how it feels, especially when you look at the Biotech indexes like NBI which have fallen well over 20% in the last few months.   On the other hand,  this same index was UP over 65% in the previous ten months.    

The zig zag has led a lot of pundits to conclude that maybe the sky isn't falling, but what we have here is a timely deflation of a bubble.   And honestly, wouldn't you rather have a prophylactic deflation of a bubble than a full-on implosion or pop?    You most certainly would, I’d wager, because the implosion/pop scenario could rattle capital markets and complicate biotech related acquisitions.

Which is where Ariad comes in.

While this Biotech bubble deflation is hard to watch, and has certainly put a damper on ARIA PPS, the thing to remember  here is that ARIA’s chart over the last year is really an “inverse bubble.”   ARIA suffered a major deflation after the FDA induced flash crash, from which we've achieved (on a good day) a 50% recovery.    We’re filling a gap here, folks, that is still ARIA’s story.

So, if you are an ARIA shareholder feeling sick about the recent PPS decline, take heart.   The current deflation of the biotech bubble  is not the ARIA narrative.    The Aria  story is about getting back to where we were after a completely unnecessary flash crash.  It is a story in which future catalytic events are on the horizon  -  AP26113, new indications for Iclusig including colon cancer & combination therapy, and of course the (soon to be released?) mystery molecule.

So why cheer on the biotech bubble deflation?   Do so because it’s not the ARIA narrative, and it’s giving us all a chance to go buy shares of Ariad at an even steeper discount.

Happy shopping.