295% Pop: Too Late to Buy Puma Biotechnology Stock?

Puma Biotechnology (NYSE: PBYI) surged more than 200% after the bell on Tuesday after reporting that its development-stage cancer drug neratinib scored an important victory in phase 3 trials.

The news surprised investors, whose worries over side effects in previous trials caused shares to fall by more than 50%, as shares held short increased from 1.5 million to nearly 1.7 million, or roughly 8% of all Puma's shares available for trading.

Delivering the goods Investing in biotechnology stocks is notoriously hit-and-miss, and Puma's roller-coaster ride over the past year serves as an important reminder that risk-averse investors should stay at bay when it comes to the rollicking industry.

But that's not the only lesson to be learned from Puma's pop-and-drop history.

The company's dramatic rise on Tuesday afternoon also reminds investors that short-term news shouldn't dictate long-term investment decisions

That's because what may seem bad today may not be viewed as bad tomorrow, particularly when it comes to hard-to-treat disease like cancer.

It was only a month ago that the revelation of moderate to severe diarrhea in neratinib patients had investors overlooking what appeared to be otherwise solid trial results.

Source: Puma Biotechnology

Updating results In phase 3, neratinib has again posted impressive results.

Patients with HER2-positive breast cancer who were treated with neratinib in a 2,800-person trial did better than those who received a placebo following treatment with Herceptin.

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295% Pop: Too Late to Buy Puma Biotechnology Stock?