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  • Small Caps NASDAQ:ABIO, NASDAQ:BFRM, and NASDAQ:HGSI Post Significant Gains Today  0 comments
    Jul 17, 2009 11:37 AM | about stocks: ABIO, BFRM, GSK

    Three Nasdaq Bio-Tech and Bio-Pharma Companies Lead the Small Caps in Early Trading. Controversy and Doubt versus Hope and Optimism; Propels HGSI.

    As the market tips first up and then down and then up again in a classic summertime seesaw market, investors aren't interested in the apathy and trading volumes prove it.

    Look at ARCA Biopharma Inc., (NASDAQ:ABIO) http://www.arcadiscovery.com/ which has a 3-Month average 3-Month daily trading volume of 118,106 shares. ABIO easily doubled that in the first few hours of trading and picked up 40% in share value ($1.03) to reach a new market cap of $25.81 million. ABIO is currently trading in the $3.45 range.

    I believe the jump here is motivated by investor confidence. Stock buyers love changes in management when things haven't been going well and an 8-k filed today reflecting the news of a few weeks ago spurred today's activity.

    On July 1, ABIO changed its management team: Richard B. Brewer will assume the role of Chairman of the Board of Directors and resign as Chief Executive Officer. Michael R. Bristow, will become President and Chief Executive Officer, a position he previously held with ARCA prior to Mr. Brewer joining the Company. Dr. Bristow will resign as Chairman but will remain a member of the Board of Directors.

    I think long-term investors know that this is more than shifting chairs at the table and expect to see results from the re-positioning and new composition.

    ABIO targets therapies for heart failure and other cardiovascular diseases. ABIO's primary product is Gencaro, a pharmacological beta-blocker and mild vasodilator for the treatment of chronic heart failure. ABIO is also in development of NU172, a short-acting anticoagulant used during medical or surgical procedures, which has completed Phase Ib clinical studies.

    At $3.45, ABIO is far-off its 52-week high of $13.45 set on 05-15-09 (thus the management shift) and is above its 52-week low of $2 set on 01-28-09. At $3.45, ABIO is pennies below its 50-day moving average and below its 200-day moving average of $5.83. Its shares out versus float ratio is near-parity.

    This is a 'watch and see' stock for new investors. If the 'new' management arrangement can produce; it could be worth an investment.

    A 2-DAY CHART ON ABIO

    A 1-YEAR CHART ON ABIO

    Also bucking the trend of today's seesaw activity is BioForm Medical Inc., (NASDAQ:BFRM) http://www.bioformmedical.com/ which picked up 18% ($0.37) in early trading on very heavy trading. BFRM's average 3-Month daily trading volume is 138,034 shares and today, a few hours into the session, BFRM had traded 2,108,641 shares (over 15 times the average). With a new market cap of $111 million BFRM is currently trading on the Nasdaq in the $2.40 range.

    The explosion this morning came on news that the FDA had given the thumbs-up to mixing BFRM's primary product; Radiesse, a dermal filler with anesthetic. In clinical trials, the technique of mixing the dermal filler Radiesse with lidocaine showed an improvement in patient comfort and an increase in patient satisfaction. BFRM has also licensed Aethoxysklerol, an injectable sclerosing drug for the treatment of varicose veins; and Biolglue, a surgical adhesive product.

    At $2.40, BFRM is below its 52-week high of $5.29 set on 08-15-08 and is above its 52-week low of $0.74 set on 11-21-08. At $2.40, it is above both its 50-day and 200-day moving averages. BFRM has trailing twelve month revenues of $64 million.  

    BFRM markets its products through sales representatives and third party distributors to dermatologists, plastic surgeons, facial plastic surgeons, and other physicians performing cosmetic procedures in the United States, Europe, and internationally.

    I'm not one for pain, so I like what this company does and that they are well-marketed, but as an investor, I would have a problem with the lopsided shares in the public mix. BFRM has approximately 46.35 million shares outstanding (64%+ which are held by insiders) and only 9.51 million shares in the public float. That sends up a red flag of stability and liquidity to me and I would like to see, without the dilution of issuing new shares, some of those insiders make more shares available to public investors.

    A 3-MONTH CHART ON BFRM

    HIGH DRAMA

    And the big controversy in Small Caps today is; who will be right. Human Genome Sciences Inc., (NASDAQ:HGSI) http://www.hgsi.com/ burst out today picking up 31.64% or $0.87 to a current $3.69 on the Nasdaq. HGSI has an average 3-Month daily trading volume of 5,066,400 and had topped 12,895,591 shares in early trading.

    The controversy is centered on who to believe: An article in Forbes this morning pointed out the general 'long-term' development cycle of stem cell research to achieve a functional, practical and useable science. It quoted a 2001 article where a former HGSI CEO said, "The routine utilization of human embryonic stem cells for medicine is 20 to 30 years hence." And, "The timeline to commercialization is so long that I simply would not invest."

    A lot of analysts don't believe that HGSI's drug Benlysta will pass completely through its clinical trails. The Benlysta Phase III study in lupus patients will be addressed by HGSI management before the opening bell on July 20th.  A downgrade by UBS in Mid-July highlighted the point.

    So who's buying up all the shares? I believe it's a combination of faithful individual investors and institutions that are publicly decrying a downfall (while hedging their bet and buying on the sly). If the drug does past muster, it will fly past its current $3.69 (and no institution wants to be caught short). If the trails fail; it's a short-sellers delight.

    So, if you want to take a chance before July 20th, now's the time.

    HGSI's clinical development pipeline also includes novel drugs to treat hepatitis C, inhalation anthrax, and cancer. At $3.69, HGSI is far below its 52-week high of $8 set on 08-18-08 and well above its 52-week low of $0.45 set on 03-11-09. At $3.69, HGSI is above both its 50-day and 200-day moving averages. HGSI's shares out versus float ratio is near-parity (with 66%+ being owned by institutions).

    A 3-MONTH CHART ON HGSI


     

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    Stocks: ABIO, BFRM, GSK
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