Shares of Avalanche Biotechnologies plummeted 56 percent Tuesday after the company reported disappointing results on its eye disease drug. Despite the steep selloff, the company's CEO wouldn't say whether he would buy more shares.
When asked directly Tuesday on CNBC's "Fast Money" if he was using the selloff as an opportunity to pick up more stock, CEO Thomas Chalberg passed on the question, pointing instead to the fact that he is "one of the largest shareholders" and that he remains committed to the long term.
Chalberg owns 1,099,000 shares, and the total market value of his holdings as of Tuesday's close was $43 million. In the last six months, he sold a total of 112,000 shares. Between Tuesday night's data announcement and Wednesday's trading session, his holdings lost approximately $24 million.
The stock was up less than 1 percent Wednesday.
It's been a wild ride for shareholders since the company went public last July. The stock nearly tripled after its IPO, but at Tuesday's closing, it was down 37 percent since going public.
The Avalanche saga is a stark reminder of the profit and potential pitfalls that come with investing in individual biotech names. Avalanche's main treatment is designed to combat a chronic eye disease that causes blindness. Beyond that drug, the company's pipeline remains small, which makes owning the stock a feast or famine proposition.
"Basically there are two categories of biotech. There's binary biotech, which this falls in, and there are biotechs that have a tremendous pipeline and drugs out on the market, which this does not fall in," said "Fast Money" trader Guy Adami. "This is a lottery ticket."