Early Tuesday morning, via an article I wrote, SA scooped a freight-train size story on Zalicus (ZLCS) informing the investment world that Zalicus drug candidate trophy, Z160, was already registered at www.clinicaltrials.gov and was poised to launch. (Meanwhile, savvy investors were already loading up on shares.)
This news was then serendipitously complemented by one of the most bullish quarterly reports out of Zalicus to date that informed investors that Exalgo sales had grown by 12% from Q1 to Q2 2012. The company had a banner quarter.
Then across the chat boards, Zacks analyst Jason Napodano was said to be tweeting his followers that his $3 target remained intact; whether Mr. Napodano tweeted that or not, it is well-known that the astute Mr. Napodano is overly-conservative to a fault. In reality, I would argue that Zalicus is about to make an exponential move to the upside and I've watched heavyweights lining up, not only all day, but top-loading buy-side bids just shy of 1M shares.
Zalicus is an enviable STRONG BUY. I will explain why this is true in the rest of this follow-up article, plus dabble in a new revelation surrounding Amgen (AMGN) -- true longs will salivate.
1. Volume is Building
A block sale trade taunted investors all day at $1.25, but then was broken in the final minutes. The stock immediately broke towards the day-high at $1.28 and then in after-hours sparked towards $1.30. Here's my read: a major entity wants Zalicus shares. Long-termers and long-termers at heart like me have watched that entity since July into August. Whomever that is, they see the same bullish upside that I do. Zalicus, that normally trades 2,640,750 shares per day over a 3 month average, has been on a hefty-trading run for over a week:
- 31 July > 5.2M
- 1 Aug > 7M
- 2 Aug > 4.6M
- 3 Aug > 3.8M
- 6 Aug > 3.1M
- 7 Aug > 5.7M
Positively amazing, if you consider the firm just raised $14.6M after cost and continues to maintain a strong cash position above $40M while multiple clinical trials are on-going.
2. Price is Gaining Bullish Traction
When I venture as I did early Tuesday that Zalicus' share price was breaking out, I could have blindly stated that without any internal news. I once held Zalicus shares when it went over $3/share--I know as well as any the potential represented by this company's pipeline.
I know, for example, that Z160 inventor et al, Canadian Terrance Preston Snutch, scientific advisor and once chief scientific officer at Zalicus ... when Pfizer (PFE) honored his ion channel work in June 2012... I knew that big pharma has once again embraced Terry's neuropathic pain leadership at the research hood that led to NMED-160, now reformulated Z-160. Terry and his research friend, Gerald Zamponi are ion channel knights and it isn't that they are going to world, no, the world is coming to them.
If investors wonder, Why is Zalicus going up? they need to look much more deeply into the big picture. Zalicus is going up because a number of catalysts (e.g. Synavive, Z160, Exalgo) are converging at the same time. The market is recognizing that Zalicus is as bullish as stellar firms like Antares Pharma (ATRS), Astex Pharmaceuticals (ASTX), and recent champions Vivus (VVUS) and Questcor Pharmaceuticals (QCOR) -- both, like Zalicus, were once in single digits. Zalicus is in a field of top biotechs and investors who invest their money in these trophies, high risk assumed and often a second away, often walk away as champions.
3. The Technical Chart Confirms a Bull-Run
While it was breath-taking for me to discover that Zalicus may still be working on an ion channel medicament for alcoholism flanked by its old Zalicus-Vancouver research team -- yes that's right as a recent scientific scholarly article taunts one's imagination -- heavyweight buyers are lining up to control a '$1.24 vs $1.25' dance that looked as tiresome as crossing the South Dakota highway plains on two hours of sleep.
You see, newbies are just beginning to cop onto Zalicus and may not quite get it yet. To "get it" means you understand the breath and depth of Zalicus' ion channel program: Pain research is just the start and Z160 is leading the charge against opioids and novel drugs like Gabapentin. But that is not the only direction Zalicus' ion channel program may take them: if you do an hour's worth of due-diligence you'd find out that one of Zalicus' ion channel pre-clinical candidates is being studied, and successfully so, for treating alcoholism... or in another indication, for epilepsy and/or for other types of pain, such as a replacement for Prialt (a needle inserted into the spine) to relieve those who are dying of cancer. But do look at the technicals (RSI, MACD, Bollinger band, 50 and 200 MA) -- blindly, I'd say, this is worth every risk assumed -- and yes, risk is always assumed; never buy more than you're willing to lose -- but Zalicus, according to the charts is on the beginning of a much greater bull run.
So why is Zalicus on the verge of a bull run? Is it purely technicals? Or is it purely fundamentals? No and no. It is both. Zalicus on the recent success of the quarterly report has proven to a pessimistic market that it is more than worth the $3 it once touched before sellers stole more than one investor's dream.
4. You Want Risk Assessment?
I have no problem telling SA readers the risk of investing in Zalicus: You could lose EVERYTHING. How's that? Everything. I have no clue whether Synavive will succeed or fail; I have no clue whether Z944 will end in defeat; I have no clue whether Sanofi (SNY) will reject Prednisporin. Z160 could be a disaster and force the company into bankruptcy.
Yet the notion of stock boards is the desire of investors that authors of articles have omniscience. Guess what? We don't. Unless we can point to a factual news item, we know no more than our readers, except in certain cases we may be better at due-diligence (but not always!). I scooped Zalicus on Z160 and I expect Zalicus will eventually issue its own new release once the trial is started.
Here's my risk assessment: If you don't like the Zalicus chart and/or its fundamentals, then get lost. Go elsewhere. Hit the road! No one's begging you to buy Zalicus.
On the other hand, people like me have made companies like Zalicus the meat and potatoes that puts food on our families' tables. I will own Zalicus as long as it is making me money.
So if my risk assessment is upsetting, too bad. I bought Zalicus shares because I thought the chart was going up; I was right and the shorts hate me. If you don't like my opinion or disagree, then tune in to CNBC. I bought Zalicus to make money, not to read another moron comment telling me that I'm the anti-christ because I sold at a profit.
5. Better Get A Handle on Z160
Now, if you survive my risk assessment comments, here's a gem worth your energy to further peruse. Z160 is going head-to-head with the big guns of pain relief. How do I know that? Read here:
At screening, the subject is currently receiving treatment for pain with gabapentin (Neurontin) or with pregabalin (Lyrica) and has received such treatment for ≥ 4 weeks at a stable dose.
Neurotin and Lyrica are like nuclear pain-relief missiles. Maybe now people will begin to understand why Z160 entering Phase II is so monumental. Z160 is going into the ring of heavy-weights. In my opinion, and it's in my opinion, Z160 will someday enter Phase III because I think Snutch's team corrected the earlier problems that derailed NMED-160.
Lyrica? Neurontin? Yes, Z160 is heading for the "Rumble in the Jungle," the "Killer in Manila"... it's game time and Mark Corrigan's team knows it. I just hope Corrigan isn't so naive that he tries to dilute a faithful cadre of shareholders one more time in 2012. Hopefully he's smarter than that, otherwise there will be scenes of the "Day After Tomorrow".
6. Surprise Out of Amgen
This may be one of the most exciting due-diligence digs I've under-taken to date. In the recent 10Q, Zalicus mentioned that it has continued to do cHTS-Chalice work with Amgen. Frankly, that shocked me. I thought the Amgen relationship was dead, but it's not. It's alive and well. So the question is, For what? What are Zalicus and Amgen working on? You mean Novartis (NVS) and Amgen are both active at Zalicus. Well, to investors sheer joy, it appears so! I have to hand it to CEO Corrigan, he's been good at hiding these collaborative relationships including removing the Amgen name from the website. But 10Q's often tell another story, thank goodness they exist.
I have discovered extensive Amgen activity that looks like it overlaps with cHTS (combination high through-put screening), the novel technology at Zalicus that Novartis is using for oncology research. Savvy investors may want to begin by reading "Combination Formulations" and then begin searching Amgen's recent research on psoriasis and B-cell cancers.
You have to understand that Zalicus has been nearly hiding this collaboration for a few years; some like me thought Amgen disappeared off the map. Apparently, they haven't. If you wild card search 'Amgen', 'cancer', 'psoriasis', 'high', 'throughput', and 'screening' at freepatentsonline, your eyes may pop wide open. I definitely need to do more due-diligence, but I think there's more here than meets the eye. While I've been chasing Novartis, Amgen has been quite busy in Cambridge, Massachusetts right under our noses.
Catch the Ride
Exalgo's up 12% and growing. Synavive's wrapping up. Z944 is on its way to completing multiple dose phase 1 studies, and Z160 is going into the ring against Neurotin and Lyrica. Could life get any better? Yes, it can, especially when your tired eyes read that expert Gene Wright, Zalicus VP is at the helm of the Z160 clinical trial and/or TP Snutch is receiving the accolades of Pfizer.
Look for the bulls to run this stock. I am VERY BULLISH. How so? Enough to write that if Synavive is successful, you can expect to double if not triple a buy at $1.25/share by even year-end -- that is my opinion.