After yesterday’s stock market close Argos Therapeutics (ARGS) announced that its Chief Operating Officer will resign effective this Friday, and it will lay off 18 employees to stay within budget. This morning the stock is down nearly $3 (27%) on the news, presumably the result of rattled shareholders dumping stock in the belief that this announcement portends worse news down the road. That’s certainly an understandable reaction, but in this case I think the situation is more nuanced than that. Last month Argos announced it raised up to $60 million from a consortium of institutional investors to assure solvency through the end of next year’s trial phase of its most important cancer treatments. The first thing those type of sophisticated investors do before committing such a large sum of money to this type of business is examine the financial statements with a fine tooth comb. And the first thing they do AFTER making that commitment is exercise their clout by eliminating unnecessary jobs, and removing from office any senior level manager they would prefer to replace with someone of their own choosing. Neither of those things are necessarily bad news, and in fact may turn out to be positive developments if they are preparing the company for an eventual buyout or other development. However, at this point there is not enough information to reach a definitive conclusion, so we will be watching the stock closely. We continue to rate ARGS a buy until further notice.