The market had two ways to view Friday’s employment numbers. They could go with the “glass half full” and say the private sector added 157,000 more jobs, upward revisions were made to the number of jobs created in November and December, and the Institute for Supply Management’s manufacturing index jumped to 53.1, well ahead of expectations.
Or they could have chosen the “glass half empty” outlook and note the unemployment rate ticked up to 7.9% while the number of people considered not in the labor force anymore rose to a staggering 89.9 million people. These are people that have given up looking for work and aren’t included in unemployment rate calculations, thus masking the real level of joblessness.
| Company | Percentage Change |
|---|---|
| Keryx Biopharmaceuticals (NASDAQ:KERX) | (21.7%) |
| Tellabs (NASDAQ:TLAB) | (7.7%) |
| Glu Mobile (NASDAQ:GLUU) | (7%) |
Now don’t go running over the cliff with them like a lemming: it could just be a temporary situation. Let’s first see whether they had good reason to fall, as panic-fueled routs can sometimes lead to excellent buying opportunities.
Dilution solution
Temporarily forgotten in the tumult caused by the failure of its experimental colorectal cancer drug perifosine to meet its primary endpoint in clinical trials a year ago was Keryx Biopharmaceutical’s (NASDAQ:KERX) other iron it has in the fire: Zerenex, a treatment for patients with end-stage renal disease who suffer from high serum phosphorus levels. That iron suddenly flared anew last week when the biotech reported the drug met not only its primary endpoints in late-stage trials, but also all of its key secondary ones, too, sending the stock soaring more than 75% in just one day. The results mean if Zerenex is approved, it would have a good chance of successfully taking on already approved therapies from Sanofi SA (ADR) (NYSE:SNY) and Shire PLC (ADR) (NASDAQ:SHPG).
With the stock continuing to climb to record heights of almost $10 a share last week — a substantial gain resulting from the announcement of the Zerenex phase 3 results — Keryx thought it was a good time to strike and said it would raise capital by offering 8.2 million new shares for $8.49 each. As regularly happens when such below-market dilutive plans are made public, the stock tumbled in part to reflect the changed landscape.
Yet now that it has a promising drug on its hands, investors will have a better entry point if Keryx can successfully navigate the FDA’s regulatory labyrinth with its New Drug Application. The money it raises gives it the financial footing it needs to go this last round and investors may look back and thank the biotech for giving them a chance to get in at a new, lower price if they believe in the long-term potential of the drug.
Disconnected from growth
Telecom gear maker Tellabs performed better than expected in the fourth quarter, but weak guidance for the coming quarter doomed its stock. The core mobile backhaul business has been in a secular decline for several years now after its one-time top customer AT&T Inc. (NYSE:T) moved to Ethernet-based solutions provided by Cisco Systems, Inc. (NASDAQ:CSCO).
