Bio Pharma Wrap Up From Last Week And One ASCO Catalyst Short-Term Pick

by: StockMatusow

In this article, I give a review of my picks from last week, noting how they did and how I think they will do for the upcoming trading week. I made a supplemental video last Friday as well which you can view on YouTube, which provides extra commentary with explanations on my written opinions, and some trading advice to consider.

The end of this article will shift focus to my first of 3 catalyst picks this week associated with the upcoming American Society of Clinical Oncology (ASCO) meetings in June. I feel my first ASCO pick will be the largest price mover. First, let's review my picks from last week and see how they did.

Arena Pharma (NASDAQ:ARNA) 2/27/12 pps: $2.62

I remarked in my last article that I strongly felt a big move upwards in the Arena price was about to occur. Of course, this was only my opinion, but anyone who knows my track record predicting short term moves knows that I am usually right on the money. I expected a move to over $2.50 to occur in the Arena price in the short term.

The short term on this pick turned out to be very short, as the following occurred with the Arena stock price after my article came out before the pre-market on 4/27/12:

Date Open High Low Close Volume Adj Close*
Apr 27, 2012 2.22 2.89 2.16 2.62 33,298,500 2.62
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Arena hit an intra-day high of $2.89 a share last Friday, so I got this call right obviously. Many Arena longs I feel got a little nutty with their responses to another article I wrote giving my views on Adam Feurstein's opinion on Lorcaserin, Arena's weight loss drug candidate. In that article, I gave an opinion that Lorcaserin has a 20% chance of gaining approval with the FDA. Perhaps I did not properly quantify this opinion, so in my last article, I offered a more rounded opinion concerning Locaserin's chances for approval to be as high as 70% based on certain factors. In the Youtube video I made, I explain this in greater detail.

The Arena stock price should continue to move up this week in my opinion, and will likely break $3.00 some time this week on anticipation of new data with Lorcaserin being released, with a PDUFA target date of June 27, 2012 for Lorcaserin. The Endocrinologic and Metabolic Drugs Advisory Committee will meet on May 10, 2012 to give their opinion on the drug.

Antares Pharma (AIS) 4/27/12 pps: $3.20

Last Wednesday, I wrote an article where I stated I thought Antares would make a short term move from a 4/25/12 pps of $3.00 to a short term target of $3.25. The stock made a move the next day to $3.34.

I remarked that the moving factors were buy out speculation, expectation of news coming, and a run up coming towards the Q1 12 earnings call. It's my opinion some news is on the way soon based on the trading pattern I have been observing with the stock lately.

The stock on 4/26/12, after hitting the $3.34 intra-day high, came under a bear raid attack that took the pps as far down as $2.98 a share before closing at $3.09, down $0.01 for the day. News did come as I listed as a moving factor.

Antares released news before the bell on 4/26 announcing to the market that a settlement was reached between Teva (NASDAQ:TEVA) and Pfizer (NYSE:PFE) in their epipen patent infringement lawsuit.

Antares today announced that Meridian Medical Technologies, a Pfizer subsidiary, has entered into a settlement agreement with Teva, Antares' pharmaceutical partner, that will resolve pending patent litigation related to its abbreviated new drug application (ANDA) for a generic epinephrine auto-injector. According to the terms of the settlement, Teva may launch a generic epinephrine auto-injector covered by its ANDA on June 22, 2015 or earlier under certain circumstances, subject to receipt of approval from the U.S. Food and Drug Administration. Additional terms of the agreement are confidential, and the agreement itself is subject to review by the U.S. Department of Justice and the Federal Trade Commission. Under a separate agreement, Teva has agreed to provide Antares with device orders of an undisclosed amount in the years 2013 and 2014, to make a milestone payment to Antares upon FDA approval of epinephrine auto-injector, and to assume all litigation costs related to the patent litigation between Teva and Meridian Medical.

Also released that day, Watson Pharma (WPI) and Antares Pharma announced the launch of Gelnique 3%™ (oxybutynin) gel 3%, for the treatment of overactive bladder (OAB) with symptoms of urge urinary incontinence, urgency and frequency. Gelnique 3%™ is a clear, odorless topical gel that has been shown to be an effective and safe treatment for OAB. The product is available in a metered pump dispenser, offering patients convenient dosing.

What I do to predict certain price moves with Antares is to record the actual trading action for the day, and look for identical patterns in the past that occurred right before Antares released news, and/or made a big price move upwards. Based on these methods, here are my opinions on the Antares stock price future moves:

$3.50 to $4.00, 2 to 6 weeks. $3.50 a share might be sooner than later.

$4 to $7 by end of this year. Higher if the buy-out rumors come to pass which I strongly believe they will by the end of the year. If this turns out to materialize, then a stock price over $10 is likely.

The ASCO annual meeting kicks off in the first week in June, and I have selected 3 companies I believe will make for great short term price appreciation moves. These 3 companies will present data at the ASCO.

June seems far off, but it's really not considering that savvy investors know that making money on the 'ASCO trade' means getting in early as cancer drug stocks typically trade up into the closely watched medical meeting.

My first ASCO pick is Celldex Therapeutics (NASDAQ:CLDX)

Celldex focuses on the development, manufacturing, and commercialization of novel therapeutics for human health care primarily in the United States. The company markets Rotarix to treat rotavirus infection. Its lead drug candidate, rindopepimut (CDX-110), is an immunotherapeutic vaccine in Phase III clinical trial to target the tumor-specific molecule, epidermal growth factor receptor variant III, as well as in Phase II clinical trial for the indication of recurrent glioblastoma. The company’s other lead drug candidates comprise CDX-011, an antibody-drug conjugate in Phase IIb clinical trial for metastatic breast cancer and melanoma indication; and CDX-1127, a human monoclonal antibody in Phase I clinical trial for the treatment of lymphoma/leukemia and solid tumors.

ASCO catalyst mover: Mid-May: topline early data for PIIb CDX-011 vs investigator's choice in advanced refractory breast cancer before ASCO, then full Phase IIb study results of CDX-011 in refractory breast cancer released at ASCO.

Celldex enrolled 120 patients with advanced breast cancer that over-expresses a protein known as GPNMB (confirmed by an independent test). The patients, all of whom no longer respond to currently approved treatments, are then randomized to receive either CDX-011 or physician's choice of treatment. The primary endpoint of the study is overall response rate.

CDX-011 is a monoclonal antibody drug conjugate. The antibody portion targets cancer cells that express the GPNMB protein, which has been shown to correlate with poorer outcomes in breast cancer patients. When the CDX-011 antibody attaches to GPNMB-expressing tumor cells, it releases a toxic chemotherapy This is similar to what was licensed from Seattle Genetics (NASDAQ:SGEN), and is the same one used in the newly approved lymphoma drug Adcetris.

Looking at the 4/27/12 Celldex chart, we can clearly see it's set up for another run toward $5.50.

Click to enlarge

I know I can sometimes draw some very crude lines, but I do this to demonstrate what I clearly see with the Celldex chart. There is no question in my opinion that the stock will be testing the $5.50 range very soon. Note the tight wedge that formed 11/11 and completed 1/12; the stock exploded upwards as the 2 lines came close to each other. The first wave completed its high in Feb, 2012. The 2nd wave completed its high at the end of March, 2012.

The biggest tip off for me is the MACD and signal here, which is showing an identical pattern before the last run-up to the 2nd wave high that approached $5.50 a share. The 3rd wave run-up is starting from a higher low, so I actually expect this short term run up to break thru the $5.50 range in the next 4 weeks or less.

My short term price target opinion for Celldex:

$5.25 to $5.75, 5 days to 4 weeks.

Expect a higher Celldex price move if the preliminary data is shown to be positive prior the ASCO meetings.

Disclosure: I am long AIS.

Additional disclosure: I may initiate a position in CLDX over the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.