Fiscal cliff talks continued on Tuesday as the U.S. president and House speaker appeared to be inching closer to an agreement that would avert a fiscal calamity at the new year, but all eyes on were on the Fed meeting Tuesday and will likely remain there on Wednesday, too. Investors keyed in on the possibilities of new stimulus following the meeting and liked what they saw, as the DOW rose by nearly eighty points. Whatever merry mood may prevail following the meeting, however, could disappear quickly if cliff negotiations start to become tense again. Current trading patterns indicate that investors who were flying in a holding pattern awaiting a cliff outcome may now be judging the situation a little more positively than before. Again, that could all change in a heartbeat as there are few working days left inside the beltway before the new year will be upon us - with or without a deal.
As those stories continue to play out, here are a few stocks to keep an eye on for the day, if not for remainder of the week ...
Healthcare, Biotech, Pharmaceutical:
Oncothyreon Jumps Fourteen Percent
Shares of Oncothyreon Inc. (ONTY) jumped by fourteen percent on Tuesday with no news released in conjunction with the move. Volume was over three times the daily norm. ONTY has been a stock to watch during late 2012 due to the expectations of a first quarter results release from a Phase III trial measuring the effectiveness of the company's cancer immunotherapy treatment, Stimuvax, in treating non-small cell lung cancer. Stimuvax is partnered with Germany's Merck KGaA (GM:MKGAF). Shares had declined earlier in the year when an independent data monitoring committee recommended that the trial continue because many investors took that as bad news since, in their eyes, had the data looked positive, then the committee would have suggested halting the trial early in order for Stimuvax to go before the FDA sooner. Shares have had their ups and downs since, but have traded for below five bucks for most of the time since. Before Tuesday's run, shares had dipped below the four dollar level.
Some speculation into this week's price move revolves around bullish options trading, but it was also just a matter of time before ONTY started to run leading into the results release, given the trends of the sector. With that said, options trading and run-ups into news - while encouraging at first look - are not definitive clues as to whether or not a trial is successful, so many investors of the sector have learned to trade with caution in such situations and to sell at least some trading shares into the pre-news spike in order to turn paper gains into actual bottles of Grey Goose.
We're likely to see a run higher over the coming weeks, assuming stable market conditions, and ONTY could rise very significantly if the results are positive. Although hanging out in the doldrums now, Dendreon (DNDN) became about a monster gainer when Provenge Phase III results were positive years ago, given the spotlight received by cancer immunotherapy stocks at the time. Because of Dendreon's woes in marketing the product, however, expectations of an ONTY rise may be tempered. A run worth watching, and put the Stimuvax results on the first quarter 2013 watch list.
Gilead Buying YM Biosciences
Gilead Sciences (GILD) was already on the newsmaker list this week when the company announced that it would conduct a two-for-one stock split early next year, but the company made news again on Wednesday with the announcement that it would buy YM Biosciences (YMI) for over half a billion dollars. It's already been a stellar year for GILD and what better way to top it off than boost the pipeline with an acquisition or two for relative chump change. The deal came at a significant premium for YMI and shares traded in kind, up by eighty percent during premarket trading. For YMI shareholders, such are the potential rewards for investing in the speculative still-developmental companies and Amarin shareholders may be looking at this deal with envy right now.
Trovagene Doubles In Price
Since we mentioned TrovaGene Inc (TROV) as a stock to watch earlier in the year shares have more than double at times and close the day Tuesday at $4.61 after hitting as high as five bucks during intra-day trading. Fueling the fire has been the company's line of diagnostic tests that have demonstrated the ability in early studies to effectively detect the presence of various cancer and infectious diseases through simple urine samples. Such a technology, should it be proven effective over the long run, could provide significant relief on a global health care system that is currently over-burdened with high costs and highly-intrusive procedures for both detection and treatment, such as biopsies and blood tests.
Volume and price have both been on the move, too, since the company conducted a stock offering in late November and followed-up with significant news on the pipeline front. During the closing days of the month Trovagene announced the "successful development of its first molecular diagnostic test capable of detecting KRAS mutations from a urine specimen." This milestone event served as validation of the previous price spike and also positioned the technology as commercially viable. Also according to the press release, "Transfer of the transrenal KRAS test to the company's CLIA lab is expected to be completed in December 2012 with commercial availability expected in January 2013."
Trovagene has also continued to build its collaborative efforts around the globe and could draw additional investor interest as results from ongoing trials start to roll in and new ones are initiated. Aside from the latest development, Trovagene's near term future also includes a trial later that will test its proprietary diagnostic technology in identifying pancreatic cancer by means of a patient's urine sample. Should the combination of news include positive interim results, trial initiations and the commercial availability of the KRAS-detecting mutations, then TROV could potentially be positioned for a continued run-up.
TROV has proven over recent history to be a solid stock to trade and/or accumulate into the spikes and dips, and as with all such stocks, it may be wise to take some money from the table into significant moves as we've seen here. That said, a core position can be maintained in order to play the long term potential of the technology.
With as significant a move as TROV has realized in a relatively short period of time, and with pipeline catalysts still underway, this is one to keep an eye on.
Amarin Drops To Nine Bucks
Shares of Amarin Corporation (AMRN) continued their downward trend on Tuesday, following last week's announcement that the company would go-it-alone (GIA) with the commercial launch of Vascepa in the treatment of very high triglycerides. Many investors expected a buyout or major partnership over the GIA strategy and investors may view the launch with greater risk now since new drugs marketed without the help of big pharma often take a little longer to catch on. Some, in fact, never do catch on - hence the continued move lower on the news. As investors still await news on the New Chemical Entity (NCE) status for Vascepa, the company announced on Wednesday morning the addition of David Stack, President and Chief Executive Officer of Pacira Pharmaceuticals, has joined Amarin's Board of Directors as an independent director. Since a major partnership was not announced, this looks to be a move to bring in additional industry experience to advise and influence the pending launch. By no means was this press release the news many investors have been waiting for and should be viewed as not much more than additional confirmation that there may not be any immediate deviations from the GIA strategy. That said, NCE could change everything as its been noted before that it is an issue with ongoing buyout and/or partnership negotiations.
In regards to the drop, this story, again, reminds me of the GlaxoSmithKline (GSK) buyout of Human Genome Sciences (HGSI) a while back - HGSI had traded to unsuspecting lows before being scooped up for twice the price of where it was trading. The final deal was less than many long investors had expected or hoped for, but in the end the premium was still money. Amarin, too, may be swept up for prices below what many were expecting, but at the end of the day, any deal would still likely come with a pretty hefty premium.
Prolor Spikes Above Five
Prolor Biotech (PBTH): Prolor Biotech may be worth keeping an eye on as shares jumped over the five dollar mark again on Tuesday for the first time since early November. Prolor had been gaining attention earlier this year for its naturally-occurring Carboxyl Terminal Peptide (CTP) technology, which can be attached to already-existing therapeutic proteins in order to slow the process by which the protein is removed from the human body and thereby create an extended life span for an already-existing treatment. This process significantly reduces the amount of injections or applications a patient would need to endure during the course of treatment. Prolor has put the CTP technology to work in its hGH-CTP, an extended-life treatment that early results have shown could replace seven once-daily injections with a once-weekly injection of hGH for hormone deficient patients. While late-stage adult trials are ongoing, another sign of validation was given the technology with the initiation of a Phase II pediatric trial in Europe. European regulators need to be essentially overwhelmed by trial data in adults before approving a trial in children, therefore allowing this trial could indicate that they were, in fact, wholly convinced in the adult data presented.
With key catalysts potentially pending, such as interim and actual trial results during the upcoming year, PBTH is worth keeping an eye on, especially if it looks like the recent push higher will gain momentum. The hormone deficiency market registers in the multi-billion dollar range, indicating that the hGH-CTP could quickly start raking in significant revenue, if approved for such an indication. It's also worth noting that Teva's (TEVA) Dr. Phillip Frost is already heavily invested in PBTH and that connection is intriguing because, which is already linked to other buyout rumors, could also be considered as a potential buyer of Prolor.
YUM! Follows in the Footsteps of McDonald's
In following the course set by McDonald's (MCD) shares earlier this week, shares of Yum! Brands (YUM) spiked by over a buck on Tuesday and were trading higher yet again by a percentage point during the pre-market on Wednesday. Yum's rebound began last week when investors took remarks made by company officials at a shareholder meeting as more encouraging than previous comments about slowing growth in China that led to a one-day drop of ten percent drop in YUM shares when the earnings warnings were initially made. The rebound in share price is a welcome event for those that bought into the ten percent drop as this company's brands have been known to do well, even in weak economies, and are still demonstrating growth in numerous overseas markets. While large caps such as this one often don't wet the appetite of the more speculative investor, those with a long term or retirement portfolio, do start looking at potentially less-stressful investments with money made from the hair-graying speculative ones. YUM may fit that bill. As mentioned recently, as well, it may worthwhile to bear in mind that trading the 'buy and hold' stocks at opportune trading points could pay off just as well as the trading of stocks in our more speculative portfolios. The percentage gains may not be as great, but throw in the dividends and the extra sleep one can get with less-stressful trading and it could be a more preferable strategy for many. This strategy still one to build a portfolio towards holding for the long term, but also allows one to secure profits when possible in order to re-invest on the dips, and can also be more profitable than 'averaging down' over the long run. Because significant percentage moves in the large caps often take quite a while to play out - at least in a normal, less volatile market - the trading is spread far apart and is preferable to the daily or even weekly trading that those with day jobs often don't have the time for.
YUM may also be moving as a result of positive Jim Cramer coverage.
Roundup: Headlines circulating early on Wednesday indicate some pessimism over the fiscal cliff deal, so it may be likely that the move higher this week could start to stall, although the markets did open modestly higher on the day. The GILD/YMI deal gave investors a jolt in the biotech/pharmaceutical sector which will likely lead to speculation as to who might be bought-out next. The focus again Wednesday is the Fed meeting, although some discouraging economic data from overseas markets may also be digested with caution by investors. I'm still liking the strategy of trading into any current rallies in preparation for a potential fiscal cliff fallout.