Think about it, 50% higher means that the company is worth double from one day to the other. Why? Because investors believe that the future cashflows of the company are twice as high (neglecting discounting)! And it is twice as high, because 2-3 people at Teva think it is a risk worth taking. How much do they know about stuttering? Probably, very little. And I am sure they are not aware of many methodological pitfalls. But, the market trusts their judgement for the moment and so the value of Indevus goes up by 50%. I think the chances of clear success are moderate, but I also have not see the individual responsiveness of each patient.
Now everyone at Indevus who gets paid in shares for bonuses is worth twice the amount! Everyone will do everything to get Pagoclone approved. It could make or break for them as millionaires! Just imagine the other pharmaceutical companies looking at Indevus. Surely they will brainstorm on how to jump the band waggon. If any of you are such a company, you can hire me as a consultant! ;-)
Here is an Associated Press article, and here an extract:
Shares of Indevus Pharmaceuticals Inc. more than doubled Friday after the company said it is collaborating with Teva Pharmaceutical Industries Ltd. to develop a treatment for stuttering and could move forward with its delayed horomonal disorder drug.
Indevus' stock surged $1.78, more than doubling to close at $3.51. The Lexington, Mass.-based company's stock has traded between $1.19 and $8.22 over the past 52 weeks. Shares of Israel-based Teva, which makes both generic and branded drugs, rose 31 cents to $46.03.
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