GTx Roaring Into Earnings: Potential Short-Term Momentum Play

| About: GTx, Inc. (GTXI)

Shares of GTx, Inc. (NASDAQ:GTXI) ripped through all major resistance yesterday on more than 3X average daily volume as it forged yet another new 52 week high at $4.92 before pulling back a bit to close the regular trading session at $4.75.

The 11.5% upsurge represented the stock's largest daily gain since 04/13/11, when Citigroup upgraded the small cap biopharmaceutical company to buy from hold. Since the analyst upgrade a little more than two weeks ago, the stock has risen nearly 73%.

GTx is scheduled to release its Q1 2011 financial results and host a conference call and webcast before the bell next Monday. As of 12/31/10, GTx had cash and cash equivalents of $58.6M and a stated book value of $1.00. With four analysts covering the company, the consensus estimated EPS and revenue for the quarter are ($0.13) and $1.5M, respectively. The company has surprised to the upside four of the last five quarters.

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GTXI Quarterly Earnings and Estimates

GTXI Quarterly Earnings and Estimates

GTXI Key Stats

GTXI Key Stats

GTx's primary revenue driver is its Fareston product, which is an FDA approved drug for the treatment of metastatic breast cancer in postmenopausal women with estrogen receptor positive or unknown tumors. The future value of the company will largely be determined by the outcomes of clinical studies of two of its lead cancer product candidates. From a recent press release:

"We are pleased to report that we have made significant progress in the Ostarine and Capesaris clinical development programs," said Mitchell S. Steiner, MD, CEO of GTx. "The ongoing discussions with FDA regarding Ostarine have helped us solidify the indication we will pursue, the prevention and treatment of muscle wasting in patients with non-small cell lung cancer. We expect to initiate a pivotal Phase III clinical trial early in the third quarter."

"We recently confirmed with FDA that the primary endpoint required for approval in the clinical development of Capesaris for first line treatment of prostate cancer is serum total testosterone. We expect to initiate the Phase IIb clinical trial in the second quarter. This study will be an open label study, and we anticipate having efficacy data in the fourth quarter of 2011," Dr. Steiner said.

Though institutional and insider holdings of the company's stock currently stand at an unremarkable 55.8% of the 50.72M shares outstanding, there has been a quarterly net increase of 3.18M shares. Additionally one of the Tennessee-based company's directors, Kenneth Glass, recently made an open-market purchase of 15K shares.

While I do not make a habit of chasing small cap bios that have just set new 52 week highs, this one seems to be in a technical breakout. As such, I will be watching the price action closely and hope to find an opportune entry point for a short-term momentum play.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GTXI over the next 72 hours.