Why Ardelyx Shares Are Sinking Today

Shares of Ardelyx (NASDAQ: ARDX) were sinking 11.5% as of 10:58 a.m. EDT on Friday. The drop appears to be a case of "buy the rumor, sell the news." The biotech stock has soared in recent weeks in anticipation of Food and Drug Administration approval of Ibsrela (tenapanor) in treating irritable bowel syndrome with constipation (IBS-C). Ardelyx announced on Thursday that the FDA had approved Ibsrela.

Investors' reaction the day after the FDA approval isn't all that unusual for a small biotech stock. Some opt to take profits off the table after a milestone development. Others could be concerned that Ardelyx might take advantage of its big share-price jump to issue new shares to raise additional capital, a move that would dilute the value of existing shares.

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Source Fool.com