Celadon vs Celladon: It pays to know your ticker symbols

Tuesday, 8-July-2014

An interesting thing happened to a biotech stock today, and the moral of the story is that it pays to know your ticker symbols well.  The company in question is Celladon (Nasdaq: CLDN).


If you are unfamiliar with them, Celladon is an under-the-radar gene therapy company whose lead product, Mydicar, is currently in a phase 2b trial for heart failure patients.  Mydicar aims to restore the SERCA2a enzyme and thus improve the flow of calcium ions in and out of cardiac cells, theoretically improving contraction.  The objective of the trial, which will read out around April of next year, is to reduce the frequency and/or delay hospitalizations for patients given Mydicar compared to those on placebo.  

 

The trial, and the company in general, were not on most people's radar until earlier this year when Mydicar was awarded breakthrough therapy designation (BTD) by FDA.  That turned a lot of heads because it was the first BTD ever awarded to a gene therapy, and is one of only a small handful to be given out by FDA's Center for Biologics Evaluation and Research (CBER).

 

The reason the stock is an interesting story today is because it is trading up, almost certainly due to a case of mistaken identity.  As I am sure you are well aware, biotech has been routed today.  The Nasdaq biotech index as a whole was down over 2% early, and many smaller biotech stocks (it felt like most in my portfolio) have been down in the 8-9% range.  Especially early on, any trader who looked at his or her screen surely saw nothing but a sea of red. I follow a couple hundred stocks on my screener, and maybe 10 at most opened green.  Which is why it was very unusual that Celladon was trading up more than 10% for most of the morning.  In fact, I noticed this and thought it was so odd to see the stock up at all, let alone more than 10%, that I tweeted the following comment earlier this morning:

There was no fundamental news to explain this outperformance.  Celladon issued no press releases nor made any SEC filings today. Furthermore, the stock's strength was also not likely due to its place as a gene therapy company because all other gene therapy stocks are down big. I took this snapshot of them a little while ago: 

As you can see, Celladon is the lone standout in the group.  It was up even more than this, well into the double-digits, earlier on.

 

So what could possibly explain the stock's outperformance on such a lousy day???  The answer came to me as I randomly overheard CNBC host Tyler Mathisen single out one stock that was up after a nice upgrade to "buy" with a $26 price target by Stifel.  The stock in question: the trucking company Celadon (NYSE: CGI).  That Celadon had such a good day that it ended up being the fourth leading gainer on the New York Stock Exchange.  I am almost certain some traders had confused Celladon with Celadon and bought the wrong stock.  Can you blame them?  

 

Given all these circumstances and the overall market carnage, there is no other way to explain why a random biotech like Celladon is up like this.  No offense to them, but it should be trading down significantly like all the others.  This must be a case of mistaken identity.  A biotech company (Celladon) is randomly benefitting from a trucking company's (Celadon) good fortune.  You can't make that up!  The moral of the story....it pays to know your ticker symbols!

Who Am I?

I'm an individual investor from Kansas City.  My focus is on biotech stocks, but I enjoy investing in all industries. I'm an old-school, buy and hold investor who believes the best way to outperform and grow capital is to own innovative companies with good management teams over the long-term. more>>

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