Figuring Neoprobe‘s (NYSE Amex:NEOP) stock price has fallen far enough, the hedge fund manager who drew attention for criticizing the company has called off his recommendation to short its shares.
Martin Shkreli, CEO of New York-based hedge fund MSMB Capital, said that with Neoprobe hovering slightly above $2, he “cannot in good faith” recommend maintaining a short position on the Dublin, Ohio-based company’s shares, according to a post Shkreli wrote at Seeking Alpha.
When Shkreli began speaking out in June about his concerns with the design of Neoprobe’s clinical trials for radiopharmaceutical Lymphoseek, the cancer diagnostics company’s shares were trading at more than $5. Neoprobe shares have since plummeted, potentially generating a healthy return for Shkreli.
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He’s become Public Enemy No. 1 to Neoprobe’s retail investors, who have denounced him on message boards, arguing that his public agitation was nothing more than a blatant attempt to enrich himself as he pushed the stock’s price down.
But Shkreli’s announcement doesn’t mean he’s become a fan of Neoprobe. He doesn’t recommend being long on its shares, either.
“It’s probably the end of my public criticism, but I still think the facts will prove me out — Lymphoseek will not be approved by the FDA,” he said in an email. “If it is, it will be a very small seller. I think I’ve put all of my information out on the table and helped the small-investor world become aware of a very risky investment.”
For Neoprobe, the apparent end of the Shkreli affair may mark the end of the company’s headaches in defending the design of the Lymphoseek trial. Company executives have expended time, effort and probably lots of frustration in rebutting Shkreli’s criticism.
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Neoprobe has said it will file for FDA approval of Lymphoseek by the end of the month. An FDA decision is expected some time around the middle of next year. If approved, Neoprobe would be free to begin marketing the drug in the U.S. The company has said it sees a potential worldwide market of $450 million for Lymphoseek.
The drug is used by surgeons to identify lymph nodes in patients with breast cancer or melanoma and to indicate whether cancer has spread to a particular lymph node.
We won’t know until the FDA announces a decision on Lymphoseek whether Shkreli or Neoprobe ultimately triumphs in the argument. But Shkreli’s critics would likely argue that he doesn’t particularly care: By then he’ll have long since taken the money and run.
The big question is: How heavy is that bucket of cash he’s running away with?
