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In the sixth part of this article, I wrote about three companies that have promising studies which help to detect cancer through genetic testing services, to treat a rare disease called short bowel syndrome and to prevent prostate cancer by means of a diagnostic test.

There are another three companies that have promising studies to prevent the onset of rheumatoid arthritis as well as to treat the pulmonary arterial hypertension and the symptomatic neurogenic orthostatic hypotension. So in this article, I will write about the reasons to take a speculative position in Cell Therapeutics Inc (NASDAQ:CTIC), Arena Pharmaceuticals (NASDAQ:ARNA) and Chelsea Therapeutics (NASDAQ:CHTP).

1. Cell Therapeutics

Cell Therapeutics Inc engages in the development, acquisition, and marketing of drugs for the treatment of cancer. The company, in collaboration with Chroma Therapeutics, Ltd., is also engaged in developing Tosedostat, an oral aminopeptidase inhibitor. Cell Therapeutics, Inc. was founded in 1991 and is headquartered in Seattle, Washington.

Pipeline Portfolio

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Source: Cell Therapeutics Inc

New catalyst

On October 15, 2012, Cell therapeutics announced that CT-1578's (previously known as SB-1578) unique kinase spectrum that selectively inhibits JAK2 over JAK1 or JAK3, coupled with its inhibition of FLT-3 and c-Fms, produced potency in not only preventing the development of rheumatoid arthritis ("RA"), but also in its treatment and reversal of bone and joint destruction after the onset of RA in preclinical models according to results published in the October 15, 2012 issue of the Journal of Immunology.

Next catalyst

Report of Third Quarter Financial Results on October 30, 2012.

Fundamentals Analysis

Short interest

Settlement DateShort InterestAvg Daily Share VolumeDays To Cover
10/15/20126,409,8766,021,0881.064571
9/28/20126,628,1341,650,4214.016026
9/14/20125,763,1044,666,0841.235105

Source: Nasdaq.com

Analyst Research

Source: Nasdaq.com

Financials

The company reported the second-quarter financial results on August 1, with the following highlights:

Revenue$0
Net Income($58.59MM)
Cash$14.75MM

My fundamental and Chart Analysis

Cell Therapeutics has a market cap of $64.65 Million and an enterprise value of $49.89 Million. Its trailing P/E is incalculable, and its forward P/E is just incalculable. Cell's estimated growth rate for this year is 45.40%. It has a total cash position on its balance sheet of just $14.75 Million.

(click to enlarge)This stock plunged from its February high of $8.25 to a recent low in October of $1.37. If you are bullish on this stock, I would look to be a buyer on the next high-volume move above some near-term overhead resistance at $1.57 a share. Look for volume that's tracking in close to or above its three-month average action of 3,949,010 shares. The RSI is in a good position and MACD marks an upward trend.

2. Arena Pharmaceuticals

Arena is a clinical-stage biopharmaceutical company, engages in discovering, developing, and commercializing oral drugs that target G protein-coupled receptors in the therapeutic areas of cardiovascular, central nervous system, inflammatory, and metabolic diseases. In June 2012, the U.S. Food and Drug Administration (FDA) approved it internally discovered and developed drug, BELVIQ® (lorcaserin HCl).

Pipeline Portfolio

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New Catalyst

On August, 2012 The company announced that it had received the 120 day assessment report as part of the European Medicines Agency review of the Marketing Authorization Application for lorcaserin. The questions and requests for additional information in this report will need to be addressed before lorcaserin can be recommended for marketing approval in the European Union.

Next Catalyst

Arena plans to respond to the 120 day assessment in the fourth quarter of 2012.

Fundamentals Analysis

Short interest

Settlement DateShort InterestAvg Daily Share VolumeDays To Cover
10/15/201247,445,3008,060,3615.886250
9/28/201247,695,39310,229,4794.662544
9/14/201245,676,40510,272,3974.446519

Source: Nasdaq.com

Analyst Research

Source: Nasdaq.com

Financials

The company reported the second-quarter financial results on August 8, with the following highlights:

Revenue$21.97MM
Net Income($22.09MM)
Cash$143.81MM

My Fundamental and Chart Analysis

Arena Pharmaceuticals has a market cap of $1.83 billion and an enterprise value of $1.77 Million. Its trailing P/E is incalculable, and its forward P/E is just incalculable. Arena's estimated growth rate for this year is 29.52%. It has a total cash position on its balance sheet of just $143.81 Million.

(click to enlarge)

This stock plunged from its June high of $13.50 to a recent low in August of $7.21. If you are bullish on this stock, I would look to be a buyer on the next high-volume move above some near-term overhead resistance at $8.75 a share. Look for volume that's tracking in close to or above its three-month average action of 8,565,650 shares. The RSI is in a good position and MACD marks a downward trend. The stock is in a bullish channel.

3. Chelsea Therapeutics

It is a development-stage pharmaceutical company, focuses on the acquisition, development, and commercialization of pharmaceutical products. It is primarily developing Northera, a novel therapeutic agent for the treatment of symptomatic neurogenic orthostatic hypotension (Neurogenic OH) in patients with primary autonomic failure, dopamine-ß-hydroxylase, deficiency, and non-diabetic autonomic neuropathy.

Products Overview

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Source: Chelsea Therapeutics

New Catalyst

On July 10, 2012 Chelsea Therapeutics announced that it had plans to stop patient enrollment in its ongoing 306B study in July, which should result in data by year-end, and will evaluate additional study designs required to support marketing authorization.

Next Catalyst

306B study data due by end of 2012.

Fundamentals Analysis

Short interest

Settlement DateShort InterestAvg Daily Share VolumeDays To Cover
10/15/20123,737,291246,65515.151896
9/28/20123,710,393359,68510.315673
9/14/20123,777,9571,017,4643.713111

Source: Nasdaq.com

Analyst Research

Source: Nasdaq.com

Financials

The company reported the second-quarter financial results on August 6, with the following highlights:

Revenue$0
Net Income

($7.87MM)

Cash$40.82MM

My Fundamental and Chart Analysis

Chelsea Therapeutics has a market cap of $124.69 Million and an enterprise value of $83.87 Million. Its trailing P/E is incalculable, and its forward P/E is just incalculable. Chelsea's estimated growth rate for this year is 7.44%. It has a total cash position on its balance sheet of just $40.82 Million.

(click to enlarge)

This stock plunged from its December, 2011 high of $5.74 to a recent low in July of $0.7. If you are bullish on this stock, I would look to be a buyer on the next high-volume move above some near-term overhead resistance at $2.10 a share. Look for volume that's tracking in close to or above its three-month average action of 773,735 shares. The RSI marks a overbought and MACD marks an upward trend. The stock is in a bullish channel.

*Chart data sourced from stockcharts, all other data sourced from Nasdaq.com and yahoo.com as well as the web of the previously mentioned company.

Source: 3 Best Biotech Stocks For This Week (Part VII)