Vericel (NASDAQ:VCEL) is having a rough day in the market today. In fact, at 9:53, the stock was trading at $4.05 per share after a loss of $0.28 per share or 6.46% thus far today. With such steep declines on the stock's value, investors are likely asking themselves, “Should I be concerned?” Today, we'll talk about why VCEL is falling, whether or not you should be concerned, and what we can expect to see from the stock moving forward. So, let's get right to it...
Why Is VCEL Tanking?
As mentioned above, Vericel is having a rough start to the week in the market today. Naturally, when I see such a big decline, I start to do a bit of research to see what it is that is causing the decline. So, one of the first things I did this morning was start researching VCEL to see what was going on. Believe it or not, there was not one piece of bad news. Fundamentally, the stock is flawless and should not be falling. However, there is a good reason for the declines...
Price movement in the market tends to happen through a series of overreactions. When we hear good news about a publicly traded company, we generally expect to see the value of the stock associated with that company skyrocket. However, it's not unlikely that after big gains we see declines. This is exactly what we're seeing from VCEL. Late last week, Vericel skyrocketed in a big way, gaining more than 80%, and for good reason.
VCEL recently announced Phase 2b results from the ixCELL-DCM study into ixmyelocel-T as a treatment for heart failure do to ischemic dilated cardiomyopathy, also known as DCM. Through the study, VCEL achieved its primary endpoint of demonstrating a reduction in the total number of deaths, cardiovascular hospitalizations or unplanned outpatient and emergency department visits as a result of acutedecompensated heart failure during a 12 month period following treatment. In a statement, Dr. David Recker, Chief Medical Officer at VCEL had the following to say...
The result of the ixCELL-DCM study, which we believe is the largest randomized cell therapy trial to treat congestive heart failure completed to date, demonstrated statistically significant and clinically meaningful reduction in cardiac events in patients who received treatment with ixmyelocel-T compared to placebo.... We are very excited about these study results given the lack of treatment options for end-stage heart failure patients.
Should You Be Concerned About VCEL Declines?
While I understand that a decline of more than 6% in any stock will generally lead to fear among investors, this particular case is different. As mentioned above, there is no fundamental data supporting a decline. What we're seeing is a basic correction to an overreaction that sent the stock further than it should have climbed. Sure VCEL deserved gains, but over 80% is a big move, and investors are correcting the growth, bringing the stock down to a more sustainable rate before growth can continue.
What I Expect To See From Here
Moving forward, I have a relatively bullish opinion with regard to what we can expect to see from Vericel. First and foremost, I'm very impressed with what we've seen from ixmyelocel-T in all phases of studies. The treatment is a much needed one in the medical field and looks like it will be approved in the long run, which will lead to big gains for VCEL. All in all, VCEL has a great team, great product, and great management. So, I see no reason to expect to see anything but growth in the stock moving forward.