Right now, biotech investors should be tracking: Astex (NASDAQ:ASTX) and Adeona (AEN). Here's why --
Among SA authors, I am a small minority who see the value in former SuperGen, now Astex. But it doesn't matter. Astex is on fire because the share price has jumped from $1.51/share on 30 November 2011 to Friday's close at $2.72/share. That is a monstrous jump in a very short two months.
As my #2 Top 3 Biotech picks, Astex is still under-valued at $2.72/share. I realize few biotechs go straight up, and retracing and accumulation may occur, but I wouldn't be surprised if Astex goes over $3/share as it hit $3.27/share on 2 June 2011. I will be more surprised if Astex doesn't go over $4/share in the coming months.
With a supplementary new drug application FDA decision ahead for Dacogen, investors are probably seeing the pps recovery and run-up going into the news. There will always be day-traders who will claim their lion's-share, but back in 2011, I observed that Astex may be a great trading stock with its variable ups and downs. Or for long-traders, sitting tight, and holding. Clearly, when it hit $1.51/share, that was a gift and congratulations to anyone who jumped in at a fabulous moment.
Still, the Market is hard to interpret and what happens after Friday's run won't be know until Monday. Yet it goes without saying that Astex is cash-flush, so I'm inclined to think the Market is returning the value to Astex that it should have been all along.
My only concern for Adeona is knowing that the recent run was accompanied by modest company news, and after watching Adeona run, fall, and now running again, I'm left to wonder: Is this real? Or is this just deep pockets taking advantage of a good situation? I don't mean to sound pessimistic, but more than one quality firm has been hurt by the Market's unexplainable 'run' then 'dump', especially in the age of computer flash-crashes. Or for excited long-investors who finally see their investment going up and wake up the next morning to read that the company is diluting shares or selling equity securities but this of course is due to the company's new direction with Intrexon Corporation.
I am scratching my head over Adeona, but its pps movement demands careful attention. Up big, down big, and now up big to $2.10/share on Friday's close. Someone is making a lot of money. But here again, like Astex, no conclusive reason unless you are bullish on the stock and think it is sorely under-valued.
What I especially like is when I see a penny-land biotech improving itself and that's my interpretation of the Intrexon deal along with the impending new name signifying the new direction for Adeona. Existence is futile unless biotechs take active steps to stay one step ahead.
Disclosure: After 72 hours of publication, I am free to buy and/or sell according to SA policy. While I do not own either stock that should not be misconstrued as a negative, since for example, I have been following Astex for over one year. Investors buy/sell at their own risk.