Editor's Note: It was disclosed after publication of this article that the author is seeking public relations business from AMPE. He also disclosed previously that the company paid for his transportation to their facility.
Now that the recent hot spell over shares of Arena Pharmaceuticals (NASDAQ:ARNA), Orexigen Therapeutics (NASDAQ:OREX), Vertex Pharmaceuticals (NASDAQ:VRTX) and Onyx Pharmaceuticals (NASDAQ:ONXX) is cooling off, traders are looking for that next explosive stock where they can go long and go short and get in and get out and hopefully make some money. Traders are looking for a stock that will soon be volatile and trading with big volume.
Over the past two months I have been writing about a company that fits this description to a tee. Ampio Pharmaceuticals (NYSEMKT:AMPE) has been quietly moving up from its low of $2.54 since mid May this year and already hit a closing recovery high of $4.19 on June 21st. With 3 blockbuster drugs and a revolutionary diagnostic Ampio is all primed up for loads of news about clinical trials, the FDA and potential pharma partners. Ampio is likely to be another stellar rocket but this time with several powerful booster stages that could keep it soaring to new heights for some time to come.
Look what Arena did on the excitement of only one drug. On just anticipation of lorcaserin being approved by the FDA, their stock ran from $2.51 on May 1st to $11.96 on June 22nd. Impressive, but imagine how high it could go if they had three blockbuster drugs ready for fast approvals instead of only one. Now that the FDA approval news is out, trading is quieting down and the price is drifting down around $10.51 and looking lower over the near term.
Onyx Pharmaceuticals traded at $43.55 on June 4th and closed at $66.34 on June 27th. No really big news on Krypolis yet, so there is probably more room to go on the upside after reasonable profit taking from this latest big run.
Orexigen Therapeutics closed at $3.12 on June 8th, and all of a sudden a quick spike has traders feverishly swapping shares at $5.58 sparked by the news that the FDA approved a competing drug, lorcaserin. Orexigen's progress with the FDA appears to be further down the road but time will tell. Technically, Orexigen appears poised for much higher ground after it eats its way through resistance at $6.
Vertex Pharmaceuticals traded as low as $37.27 on May 4th and then shares traded at $64.70 on May 14th looking suspiciously like the peak of the head of a head and shoulders reversal pattern that could be ominous for the short term. Today's decline of $9.93 could see followthrough to $42/$44 range before heading back up to challenge old highs.
Ampio shares formed a rare and solid triple bottom at $2.54 to $2.65 and exhibit well executed accumulation by sophisticated buyers who appear to be positioning for the long term.
Traders are most likely eyeing Ampio for several reasons. First, trading volume has been steadily increasing over the past 60 days. Second, price has been slowly advancing indicating skillful accumulation. Third, short interest has moved up to 2,809,759 shares as of June 15th and requires 7.7 days to cover at current volume. Fourth, when trading volume decreases, selling pressure dries up noticeably. And last but most important, the biggest tip ever that went completely unnoticed, was generously handed to investors and traders by CEO, Mike Macaluso, when he was quoted in the press release of June 21st, Ampio Reports Successful Type B Pre-IND Meeting with the FDA for its Drug Zertane(NYSE:TM) to treat Premature Ejaculation (NYSE:PE). Macaluso says,"This positive guidance (from the FDA) will allow us to formalize our negotiations with potential partners." There is no way to be certain but this sounds pretty much like negotiations have been underway with a licensing partner and now that critical clinical trial guidance details are known, a formal agreement can be formalized which means a big announcement may be coming soon!
With three blockbuster drugs lined up for quick FDA approvals (much less than one year) and another blockbuster product that is a revolutionary diagnostic, Ampio has a very full deck of announcements to come and is certainly the one to be watched very closely.
All of the drug stocks listed in this article can be highly volatile and are subject to risk. Shares can rise or fall substantially and quickly resulting in large profits or large losses. There is risk to both sides of the trade, long or short. Positive news can result in losses to short positions and equal gains to long positions while negative news such as failed trials or failed FDA approvals can result in losses to long positions and equal gains to short positions.
Pharma's Untapped Gold Mine explains some of the most concerning issues of the pharma industry today and describes Ampio Pharmaceuticals' maverick model, their drugs, diagnostic device and Ampio risk factors in more detail.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.