Three Biotechs Hitting New 52-Week Highs

Includes: ACET, NPSP, OSIR
by: John C. Lee

Osiris Therapeutics Inc.

Osiris Therapeutics (NASDAQ:OSIR) is a biotech based in Maryland which specializes in bone marrow stem cell products that treat inflammatory, orthopedic, and cardiovascular areas of medicine.

On Tuesday, September 23, OSIR announced that it enrolled 62 patients in the Phase 2 trial to treat pulmonary disease through its Prochymal product formulated from adult mesenchymal stem cells.

On Thursday, August 7, OSIR reported a Q2 loss of $0.48 per share or $15.4 million on $2.5 million in revenue vs. a loss of $0.37 per share or $10.5 million a year ago. Analysts expected a loss of $0.51 per share on $1.6 million, beating both earnings estimates and revenue targets. If a stock makes new highs, it doesn’t mean the company is profitable.

The most recent analyst action came from Jefferies & Co which downgraded OSIR to “Underperform” from “Hold” and set a target price of $11 on August 1. The close as of Tuesday, September 23 was $19.12.

Technically, OSIR looks like it will go higher but on a pullback. $17 is the target pullback level and the 50-day MA is the guide. This is a common “stair-step” pattern which is characterized by long consolidation periods (1-2 months) with forceful breakouts.

This is a low volume stock and should be traded with caution.

NPS Pharmaceuticals Inc.

NPS Pharmaceuticals (NASDAQ:NPSP) is a biopharma based in New Jersey that specializes in gastrointestinal and endocrine disorders.

On Tuesday, September 16, NPSP reported positive interim data from the hypoparathyroidism Phase 2 study. GATTEX is currently in Phase 3 development, NPSP558 is in Phase 2 development. PREOS completed a Phase 3 study and NPSP156 is still in its preclinical stage.

The company reported positive earnings in 12 out of the last 13 quarters. No analyst actions were taken in 2008, even though four firms cover NPSP (Credit Suisse, Goldman Sachs, Jefferies & Co, Lehman Brothers. Unknown if LEH still covers the stock.)

I don’t expect either GATTEX or NPSP558 to be commercialized until 2011. Therefore, there are few short to intermediate-term catalysts to prop this stock up.

The stock is up 115.9% year-to-date, outperforming nearly all peers in the pharmaceutical sector.

Technically, NPSP may be forming a “bump-and-run” reversal. Any penetration of the support line below on heavy volume indicates a major trend reversal. NPSP may go higher, but it’s too extended for any short- or intermediate-term long position.

Aceto Corp.

Aceto Corp. (NASDAQ:ACET) is a multi-segmented business based in New York that specializes in heath sciences, agricultural bio drugs, chemicals, and crop protection. And distributes over 1,000 pharmaceuticals and chemicals throughout the world.

On Friday, September 5, ACET reported Q4 earnings of $0.32 per share or $8 million on $104.7 million vs. $0.17 per share or $4.2 million on $87.2 million a year ago. Profit grew 90% and revenue grew 20% for the quarter.

The health sciences unit grew 34.9% and the crop protection unit grew 19.5% helped by the global demand in the agricultural/fertilizer and animal testing industries.

ACET is covered by 2 firms (Buckingham Research Group and Sidoti & Co. Neither has issued a rating since 2003.

ACET’s chart is “choppy” and numerous support levels are violated during the uptrend making ACET a difficult short-term trade. Instead, ACET should be considered for an intermediate trade. A long position can be placed around $9 and a short position can be placed around $8.50 if such opportunities exist.

Disclosure: None at this time.

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