Bonus Round: 9 Stocks Follow-Up

by: James Stocklasar Thomas Jr.

Last Wednesday I released an article on Antares Pharma (AIS) that unleashed a flurry of comments because I explained I was looking for a re-entry point. I had sold only because I had achieved some personal goals and needed the money at that time.

I remain a great admirer of Antares. I also know that the share price has been retracing: from $3.32 pps close on 26 March to $2.99 pps on 19 April, or -10%. At the present time of writing here on Monday, it is $2.92 pps. Therefore, I represented why I thought the share price may fall further. I offered two concerns which understandably there are differing opinions: (1) concerning the upcoming Q1 report, that I had low expectations, and (2) the outcome of the Teva (NYSE:TEVA) vs. Pfizer (NYSE:PFE) trial may not go in Antares's favor per an analysis done by SA author Larry Smith who offered various scenarios. All to say, I saw this as a "bump in the road" not the end of the road! Remember, I am looking for a good re-entry point.

Antares, despite what many including myself think has a remarkable future ahead is not bullet proof. In December 2011, its LibiGel drug candidate failed in phase 3 clinical trials, even though the majority trumpeted it as a 'slam dunk'. So no one should be so foolish as to think that the share cannot retrace or dip much lower than it is now. And, only in my opinion, I think it's going to in the short-term, then later rebound much higher later in the year.

An Uncanny Observation

Part of my selective choice in April was that: most of these stocks were being promoted as 'tips' on chat boards (a venue I've since abandoned as utter futility) and at least four of them had an uncanny similarity: relatively low 3 mth/avg trading volume--easy prey.


Regarding ACADIA, I wrote: "My recommendation is that day-traders take their profits and wait until the stock retraces." Since my article publication on 4 April, from 3 April close until 20 April close, the stock has fallen -27%. It looks like I got that one 100% correct. Here on Monday, I see it's slipped to $1.46 pps at the time of writing.

Regarding Arena, I wrote a neutral article that focused on the nature of risk. Since my article publication on 5 April, from 4 April close until 20 April close, the stock has fallen -28%. It looks like I got that one 100% correct too, at least for now. Here on Monday, it's now down to $2.11 pps at the time of writing. Of course, the Lorcaserin faithful are hanging tight with high hopes.

Adding in Antares which has been retracing, now below $3 pps here on Monday, it looks like I'm 3 for 3. And it's not that I want to be negative, but my, yes, negative outlook in early April, has turned out to be quite accurate over against the so-called 'tips' on chat boards.

Along the Way

As background, one stock I didn't cover in April, but I studied was NuPathe (PATH). I can't take any credit here for getting this right, but I did enjoy studying a rather unique phenomena. This table will help me explain:

3/8/12 15,900 $3.06


8,000 $3.06
3/12/12 10,100 $3.07
3/13/12 102,800 $3.27
3/14/12 405,100 $3.97
3/15/12 757,100 $4.81
3/16/12 416,300 $4.84
3/19/12 249,900 $4.50
3/20/12 823,400 $4.01
3/21/12 286,100 $3.85
3/22/12 280,000 $3.70
3/23/12 85,400 $3.64

What I observed was that this stock's average volume (3mth) wasn't anywhere near 100K shares/day. Then suddenly, on 13 March, there was this sudden 100K rise followed by spiking volume, yet the only company news I could find was a press release on 13 March promising the Q4 report on 20 March. It was then that it occurred to me that for a company with such low trading volume, it could easily be moved up or down at-will by little more than 100K shares buying and/or selling. And what would happen if you got others to join you? By the way, since the $4.84pps high on 16 March, the stock has fallen a whopping -36% to $3.19 pps on 20 April. I'm glad I wasn't drawn into this chat room favorite because today I'd be a bag-holder just like the retailers drawn into Arena at its higher prices. Of course, I'd be 4 for 4. But being negative doesn't win you friends. Thank goodness the U.S. Constitution protects free speech.

So Where Are We Since I Last Wrote?

Well, now let's take a good look at the six biotechs I covered on 4-5 April, using the 3 or 4 April close to compare where their share price closed on 20 April:

  1. Acura Pharmaceuticals (NASDAQ:ACUR) down -4%.
  2. Alimera Sciences, Inc. (NASDAQ:ALIM) down -18%.
  3. Horizon Pharma (NASDAQ:HZNP) down -11%.
  4. BioDelivery Sciences International, Inc. (NASDAQ:BDSI) up 31%.
  5. ACADIA Pharmaceuticals down -27%.
  6. Arena Pharmaceuticals down -28%.

It appears I got 5 out of 6 correct. I could add NuPathe as a 7th good decision on my part given how much it's retraced. I could also add Antares that hovers below $3 pps. However, I certainly got BioDelivery wrong, but the question is: Will this pop drop too? Nevertheless, I certainly missed BioDelivery's glorious run as on 17 April the company announced a $15M milestone coming their way.

Another Musing: Horizon

In the scope of things, it might be good to start with another table:

3/27/12 52,600 $3.66
3/28/12 162,500 $3.54
3/29/12 292,700 $3.69
3/30/12 814,100 $4.14
4/2/12 483,000 $4.09
4/3/12 309,600 $4.30
4/4/12 223,500 $4.24
4/5/12 213,200 $4.10

Notice the jump in volume with the increased share price following a day or two later, then notice the slow trickle down. By 12 April the volume was already back down to 60,100 and the share had fallen to $3.74 pps; by 18 April on 49,100 shares traded with a close at $3.70 pps close. Interesting. The last press release from the company came on 28 March. Perhaps investors were inspired to jump in? How many are still holding above $4 pps?

What I also wonder is: Are 100K and above share buyers moving into stocks like Horizon, then walking away? Is the process: (1) "x" buys shares, (2) "x" and/or "y" floats the tip, (3) "x" and/or "y" and/or "z" writes the article, (4) then "xyz" sell while "abc buys in? Gee, it sounds too easy.

In Recap

It certainly looks like I got BioDelivery Sciences wrong and I have no problem admitting to that. But I've also gotten the following companies right: Antares, NuPathe, Acura, Alimera, Horizon, ACADIA, and Arena here in April. In my opinion, BioDelivery's share price has to retrace or take a breather at some point, but since I was resoundingly incorrect, I will leave that one for the experts.

Oh, and by the way, Zalicus (ZLCS) had a nice run to $1.25 pps close on 25 March and has since retraced to flat-line, or $1.04 pps, where it was when it started that run. Hmmm, it looks like out of my nine stocks in April, I was on the right side eight times. But to each his/her own: after all, it's only "in my opinion."

Looking Forward

Antares: I still see the possibility of it retracing, however, I remain bullish on the company long-term. I will wait until Q1's quarterly, but that is me. I could very well end up on the wrong side of this one.

NuPathe: I'm going to keep a close watch on this one. It may be another long-term gem, but I'd still like to get (if I decide to) at a lower entry point. This is the kind of firm that could be picked up by Covidien (COV).

Arena: I still see a lot of risk here and people are split on Lorcaserin. However, some may be want to buy for the quick trade, but the news could go either way. I happen to agree with Adam Feuerstein's negative analysis, but I know there's a lot of investors who disagree. All I conclude is: it's risky. Don't gamble more than you're willing to lose.

ACADIA: This is still a stock I would not buy. The Street recently announced a down-grade which is enough for me to want to stay away.

BioDelivery: Like I wrote, I missed that one by a long shot. Its bullishness is undeniable. But please don't misinterpret me when I write: every stock at some time retraces. But congratulations to all who are reaping the benefits.

Acura: How can I say this? Maybe this way. Acura is bouncing along a sub $3.50 pps channel and it's daily trading volume is too low for me. You could buy here and get stuck. But that's only in my opinion.

Alimera: Until I see Alimera stop retracing, I cannot change my near-term negative outlook. Stocks at this level can nickel and dime shareholders. I just prefer to see this stock put in a bottom before I would want to enter in.

Horizon: Horizon's chart continues to bounce along the sub $4 pps range, so I'm not sure I see a logical reason to enter here. This may be 2H 2012 story, so it will need to be watched.

Zalicus: If Synavive succeeds in Phase II and Z944 passes Phase I, then Zalicus is going to zoom in 2H 2012. But there is risk here because it's yet to happen and the company has been tightening its expense belt by closing down the Vancouver operation. I still think the pps is under-valued, but to date, the market seems to disagree.

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

Disclaimer: Investors buy and/or sell at their risk. "Long" means until I decide to sell for my own personal reasons. As a private investor, I reserve my right to buy and/or sell at any time. I submit articles to SA as a freelance writer.

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