Milestone Pharmaceuticals Plummets 39%—What’s Behind the Freefall?

• Milestone (MIST) collapsed 39% intraday to $1.56, erasing nearly $100 million in market cap.
• FDA extended CARDAMYST’s PDUFA decision to December 2025, delaying commercialization hopes.
• Concurrent $75M royalty deal extension and aggressive public offering triggered dilution fears.
• Stock gapped down from $1.76 open to test 52-week lows near $0.63 after spiking to $1.93 earlier.

Today’s freefall marks a seismic shift for the biotech, as investors grapple with delayed regulatory timelines and capital-raising dilution—both red flags for a company racing to commercialize its lead therapy before cash runs dry.

Regulatory Delays and Equity Dilution Collide to Crush Sentiment
The catastrophic 39% plunge stems directly from two simultaneous corporate actions. First, the FDA’s six-month PDUFA delay for CARDAMYST’s NDA submission created uncertainty around commercial launch timing, eroding the company’s near-term revenue runway. Second, the concurrent public offering—which dilutes existing shareholders—sparked panic selling as investors feared further capital raises to fund prolonged development. Compounding pressure, the $75M royalty purchase agreement extension now ties milestone payments to December 2025 FDA approval, creating a binary 'approve or die' scenario for MIST’s survival. Technicals worsened as the stock broke below its 200-day moving average ($1.69), triggering algorithmic sell stops.

Betting on the Bounce or the Bust: Options to Watch in This Volatile Climate
Technical indicators scream caution:
• RSI: 85.59 (deep overbought, signaling exhaustion)
• Bollinger Bands: Price hugs lower band ($1.41), suggesting oversold conditions
• MACD: Bullish crossover (0.20 vs 0.15 signal), but histogram narrowing warns of momentum loss
• Support/Resistance: Immediate resistance at $1.73 (July lows), key support at $1.47 (52-week trough)

Aggressive traders can deploy credit spreads to capture volatility. For directional bets:
1. MIST20250718P1.5 (Put, Strike $1.50):
- 156 contracts traded, $977 turnover
- Delta -0.38 | Theta -0.004 | Gamma 1.16
- Offers 15.6% leverage with 38% downside protection. Ideal for a short-term rebound bet—theta decay slows post-FDA news, but gamma exposure amplifies gains if volatility spikes.
2. MIST20250815P1.5 (Put, Strike $1.50):
- 126 contracts traded, $1,895 turnover
- Delta -0.38 | Theta -0.0016 | Gamma 0.82
- 10.4% leverage with 6-month time horizon. Best for contrarians betting on a December FDA approval rally—theta erosion is minimal while gamma provides asymmetric payoff if shares stabilize.

Options Payoff Primer (5% downside scenario to $1.48):
- July Put (ST=$1.48): Max payoff $0.02 (K - ST)
- August Put (ST=$1.48): Max payoff $0.02
Both contracts offer limited downside protection but capitalize on volatility premium.

Trading Hook: Bulls target $1.73 resistance break, while bears short into $1.47 with puts as volatility anchoring.

Backtest Milestone Stock Performance
The backtest of the MIST ETF after an intraday plunge of -39% shows a significant decline in performance. The strategy resulted in a -30.13% return, vastly underperforming the benchmark, which had a return of -100.00%. Despite this, the strategy still delivered a positive excess return of 69.87% and a CAGR of -6.95%, indicating some resilience amid extreme market conditions. However, the high volatility of 96.97% and a maximum drawdown of 0.00% highlight the strategy's risk profile, with Sharpe ratio at -0.07 suggesting the risk-adjusted return was negative.

Hold Your Breath—Milestone’s Fate Hinges on FDA and Capital Moves
This freefall isn’t sustainable without a catalyst—watch the December 13 PDUFA date as the ultimate litmus test. Investors must weigh dilution risks against CARDAMYST’s commercial potential. With sector leader AMGN (-1.5%) underperforming, biotech sentiment remains fragile. Aggressive traders can layer in puts for volatility capture, but the path to recovery demands FDA clarity and capital discipline. Final warning: Do not chase the dip without a hard stop below $1.47—this is a binary bet on survival, not a value play.