Tuesday's Bio Pharma Watch List

 |  Includes: AMRN, ELN, JAZZ, MNK
by: StockMatusow

I ran a quick scan of some Bio Pharmas I feel are going to make a move today to the upside. I will list below the companies and why I feel they will move to the upside today.

Jazz Pharma (JAZZ) 2/27/12 pps: 50.55

Jazz Pharma is a specialty pharmaceutical company that engages in the identification, development, and commercialization of pharmaceutical products to meet unmet medical needs.

Yesterday, Jazz Pharma reported better than expected numbers from their 10K, 2011. Net income rose to $37.5 million, equating to 88 cents per share vs. $24.5 million, which was 56 cents per share in the same quarter a year earlier. This is an impressive rise of 53.2% from the same quarter one year ago.

Jazz reported adjusted net income of $1.17 per share, beating the consensus estimate of $1.01 per share. The company also beat the average revenue estimate of $80.8 million.

Jazz is trading near its 52 week high of $51.69 set on February 24, 2012, 2 trading sessions ago. The shorts love to come into situations like this for a quick scalp because longs usually take profits and re-up on shares after a retrace. The stock hit a low in the last trading session of $49.51 so the shorts appear to be taking their profits, and I expect a new round of buying today that should take the stock past its 52 week high.

Questcor Pharma (QCOR) 2/27/12 pps: $39.21

Questcore is a biopharmaceutical company that provides prescription drugs for the treatment of multiple sclerosis, nephrotic syndrome, and infantile spasms indications.

On Feb. 22nd, Questcore reported revenues of $75.5 million, smashing consensus opinion of $71.5 million. Sales also crushed the prior-year quarter's $29.3 million. The reported EPS was $0.48, also smashing the consensus estimate of $0.40 per share. GAAP EPS of $0.48 for Q4 were 433% higher than the prior-year quarter's $0.09 per share.

I love being right on a stock when others bash on it. In a prior article I remarked that my target pps for Questcore this year is $45 a share. I fully expect the pps to get to that level, and likely sooner than I originally expected. In another article, I remarked about Streetsweeper's somewhat scathing and manipulative article on Questcore, that Steetsweeper's opinion on the company was less than reputable in my opinion. This company is a long term winner in my strong opinion, and should be considered for a diversified strong portfolio. Expect a nice move upwards today.

Elan (NYSE:ELN) 2/27/12 pps: $12.82

Elan is neuroscience-based biotechnology company primarily in Ireland and the United States.

On February 14th, Elan reported a loss of 10 cents per share (excluding special items) for the fourth quarter of 2011, coming in below the consensus estimates of a loss of 3 cents per share. Fourth quarter 2011 revenues increased 18% from last year to $271.0 million. The consensus estimate was $283 million.

The stock is over sold a bit, and I expect a strong move to the upside today.


Date Open High Low Close Volume Adj Close*
Feb 27, 2012 12.47 12.91 12.37 12.82 2,915,300 12.82
Feb 24, 2012 12.51 12.65 12.41 12.54 2,104,000 12.54
Feb 23, 2012 12.18 12.52 12.00 12.51 3,424,900 12.51
Feb 22, 2012 12.07 12.25 11.93 12.12 2,526,400 12.12
Feb 21, 2012 12.59 12.62 11.93 12.09 5,640,300 12.09
Click to enlarge

Note the last trading session where volume picked up again and the pps bounced off a session low of $12.37 to close strong at $12.82. The relative strength (RSI) is improving quite a bit. On February 25th, we can see another $0.50 bounce off the session's lows. I expect a move to $13.25 today.

Amarin (NASDAQ:AMRN) 2/27/12 pps: $8.87

Amarin is a clinical-stage biopharmaceutical company that focuses on developing treatments for cardiovascular diseases.

Amarin will report on the company's fourth quarter and year-end 2011 financial results and 2012 business initiatives on Wednesday, February 29, 2012, at 4:30 p.m. EST. The conference call will follow the anticipated release of the company's fourth quarter and year-end 2011 financial results earlier that day.

I expect a run up to start today in anticipation of the earnings call on Feb. 29th.

Amarin's AMR101, its lead drug for the treatment of patients with very high triglyceride levels (≥500 mg/dL), faces an FDA decision for approval in July of this year. Many do not think the drug will gain FDA approval, but I believe it will in fact, gain approval.

Here is why: Currently, there are no omega-3 fatty acid based drugs approved in the U.S. for patients with high triglycerides who also have mixed dyslipidemia and only one U.S. prescription grade omega-3 fatty acid based drug Lovaza is approved for treatment of patients with very high triglycerides. Lovaza is marketed by GlaxoSmithKline (NYSE:GSK) in the United States. It is estimated that there are approximately ten times as many patients with high triglycerides than very high triglycerides.

Amarin's stock is trading near the lower end of its 52 week Range of $5.99 - $19.87 a share.

Feb 27, 2012 9.00 9.08 8.78 8.87 1,058,100 8.87
Feb 24, 2012 9.04 9.09 8.85 8.99 1,326,000 8.99
Feb 23, 2012 8.72 9.11 8.70 8.99 2,782,000 8.99
Feb 22, 2012 8.71 8.78 8.49 8.68 1,075,200 8.68
Feb 21, 2012 8.78 8.81 8.62 8.73 2,891,000 8.73
Feb 17, 2012 9.35 9.38 8.15 8.57 4,991,000 8.57
Click to enlarge

We can see above that the stock is basing upwards from its close on 2/17. That day saw very heavy volume, as we can see the stock was sold from the opening bell. The markets will be up today, and so will Amarin, and I believe it will continue to trade to the upside as we draw closer to the July FDA advisory panel decision.

The stock is risky, so be careful as it has a higher beta of 1.38, and takes some guts to hold this one overnight as I remarked in a prior article of mine.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.