GenVec Shows Again the Risks of Biotech Trophy Hunting (GNVC, ROSG, MRNA, CYCC)

January 27, 2010 · Filed Under Financial, M&A, R&D · Comment 

We have covered over and over in recent months about the news flow of biotech and emerging biohealth companies creating an avenue that is causing traders to chase many speculative stocks up exponentially on news.  In 2009 we had perhaps a dozen biotech and biohealth related stocks which posted gains of 1,000% or more, and this is where that term of a ‘ten-bagger’ comes from.  In recent weeks we have seen shares of GenVec Inc. (NASDAQ: GNVC) rise exponentially.

The 52-week low is $0.33 and this was effectively at $1.05 to $1.20 at the very end of 2009.  In recent weeks and recent trading days we have seen news that allowed this to run even above $3.00.  Then today came the share price haircut after the company entered into a registered offering of $28 million in agreements with institutional investors for the sale of 14 million shares of its common stock and warrants to purchase 4.2 million shares of common stock.  At 1:05 PM EST GenVec shares are down 24% at $1.87 on more than 18 million shares.

We have referred to chain of positive news followed by more positive news, followed by a highly dilutive capital raise on several occasions as “Three-Card Monty.”  That does not mean that all biotechs should be avoided nor does it mean that all biotechs raise cash after a big move, but it is the umpteenth reminder of how biotech investors and traders need to be careful what they are getting into when they chase after stocks in a trophy-hunting strategy.

We have recently seen this happen in both Rosetta Genomics, Ltd. (NASDAQ: ROSG) and in MDRNA, Inc. (NASDAQ: MRNA).  Cyclacel Pharmaceuticals (NASDAQ: CYCC) took a big hit after it raised cash following its big news that drew in trophy hunting biotech traders.

Here was the full report from the end of 2009 showing how and why so many traders are willing to chase the 10-baggers or 1,000% possibilities.  Stocks noted are JAZZ, TRGT, VNDA, DNDN, HGSI, CGEN, BNVI, QCOR, ACHN, PSDV, ATHX, SNSS, AVNR, BIOD, ALXA, and CTIC.

This is just one of the risks involved in chasing a biotech stock that is up big after a news dissemination of after a run up has been seen after waves of good news.  Many companies in the biotech sector need capital to operate and some need it for satisfaction of listing requirements.  You cannot blame a company for wanting to raise capital after a move up rather than when they are down and out.  You just need to keep track of which companies need capital when chasing after the next ten-bagger.

There is also some good news here that occurs for those who may have wanted to get into some of these companies but may have missed their chance.  Usually we see large price drops, and that gives investors and traders a chance to buy into these stocks at a discount if they believe that the news flow ahead is substantial and is not just a series of press releases geared toward generating short-term price pops.

JON C. OGG

Tags: , , ,

MDRNA & Rosetta Play Three Card Monte on Traders (ROSG, MRNA)

January 14, 2010 · Filed Under Cancer, Financial · Comment 

There is an old game that you probably have seen played on the streets of New York, and that is Three Card Monte.  Any time you see small-cap and micro-cap biotechs issues very great sounding news, but then they turn around and immediately announce a secondary offering or a capital raise, this feels like you just got suckered into a game of Three Card Monte.  This is the case in both Rosetta Genomics, Ltd. (NASDAQ: ROSG) and in MDRNA, Inc. (NASDAQ: MRNA).

Yesterday was a huge day for Rosetta Genomics, Ltd. (ROSG).  The company issued a release showing “Rosetta Announces that Johns Hopkins University Researchers Demonstrate miRview squamous Classifies Non-Small Cell Lung Cancer with Extremely High Degree of Accuracy”… This stock closed at $1.85 on Tuesday, yet the stock ran to $3.09 yesterday on a whopping 1.2 million shares.  Not bad considering average volume was barely 30,000 shares.  Then after the close yesterday came the announcement that it was raising $5.1 million in a registered direct stock offering.

MDRNA, Inc. (MRNA) rose sharply yesterday after the company announced ‘potent anti-tumor activity against multiple targets in liver and bladder cancer.’  This closed at $1.39 yesterday on a whopping 29 million shares, up from a close of $0.95 the day before.  Then this morning came the announcement that it is raising $5.5 million in a registered direct stock offering.

It is no shock that both stocks are getting shelled and drummed this morning.  They deserve it.   Rosetta is down 32% at $2.09 and that MDRNA is down 22% at $1.08 right after the open today.

The only good news here is that good news followed by a secondary doesn’t mean that no more good news can come.  It just feels that way if you get suckered in by the news and then see the drop this much.  If you have seen a game of Three Card Monte played on the street of New York, have you ever seen anyone really win?  Exactly.

JON C. OGG
January 14, 2010

Tags: ,

Top BioHealth Analyst Calls (CFN, GPRO, MD, PSYS, PMC, QLTI, ROSG, SYK, SXCI)

September 9, 2009 · Filed Under R&D · Comments Off 

This goes a bit beyond biotech and drug companies, but there have been many analyst research calls this morning in healthcare related stocks from drugs to genomics to IT to medical devices….  Here are the calls from this Wednesday morning:

  • CareFusion Corporation (CFN) Started as Overweight at Morgan Stanley.
  • Gen-Probe (GPRO) Raised to Outperform at Oppenheimer.
  • MEDNAX, Inc. (MD) started as Market Weight at Thomas Weisel.
  • Psychiatric Solutions (PSYS) Started as Overweight at Thomas Weisel.
  • PharMerica Corp. (PMC) Started as Market Weight at Thomas Weisel.
  • QLT Inc. (QLTI) target raised to $4.50 from $3.50 at RBC.
  • Rosetta Genomics (ROSG) Cut to Hold at Cantor Fitzgerald.
  • Stryker (SYK) Raised to Buy at Deutsche Bank.
  • SXC Health Solutions (SXCI) Raised to Outperform at William Blair.

JON C. OGG

Tags: , , , , , , , ,

Full 2009 ASCO Cancer & Oncology Primer (ABII, AEZS, ALTH, AMGN, APPA, ARQL, BMY, CLDX, CELG, CTIC, CGRB, LLY, EXEL, GHDX, GSK, IMGN, MEDX, MDVN, MITI, OGXI, OSIP, PPHM, PFE, ROSG, SNTA, TRBN, ZIOP, ZGEN)

May 27, 2009 · Filed Under Cancer, R&D, dendreon · Comments Off 

We have already seen a massive round of abstracts ahead of the huge American Society of Clinical Oncology, or ASCO meeting for 2009, which is scheduled to start this weekend.  ASCO is usually thought of as the Holy Grail of cancer conferences and these abstracts and presentations are viewed by investors, analysts, clinicians, doctors, and by cancer patients.

We compiled a brief synopsis for the following drug and biotech companies: Abraxis BioScience, Inc. (NASDAQ:ABII), AEterna Zentaris Inc. (NASDAQ: AEZS), Allos Therapeutics, Inc. (NASDAQ: ALTH), Amgen Inc. (NASDAQ: AMGN), A.P. Pharma, Inc. (Nasdaq: APPA), Arqule Inc. (NASDAQ: ARQL), Bristol-Myers Squibb (NYSE: BMY), Celldex Therapeutics (NASDAQ: CLDX), Celgene Corporation (NASDAQ: CELG), Cell Therapeutics (NASDAQ: CTIC), Cougar Biotechnology, Inc. (NASDAQ: CGRB), Eli Lilly and Company (NYSE: LLY), Exelixis (NASDAQ: EXEL), Genomic Health, Inc. (NASDAQ: GHDX), GlaxoSmithKline (NYSE: GSK) , Immunogen (NASDAQ: IMGN), Medarex (NASDAQ: MEDX), Medivation, Inc. (NASDAQ: MDVN), Micromet, Inc. (NASDAQ: MITI), OncoGenex Pharmaceuticals, Inc. (NASDAQ: OGXI), OSI Pharmaceuticals (NASDAQ: OSIP), Peregrine Pharmaceuticals, Inc. (Nasdaq: PPHM), Pfizer Inc. (NYSE: PFE), Rosetta Genomics (NASDAQ:ROSG), Synta Pharmaceuticals (NASDAQ: SNTA), Trubion Pharmaceuticals, Inc. (Nasdaq: TRBN), ZIOPHARM Oncology (NASDAQ: ZIOP), and ZymoGenetics, Inc. (NASDAQ: ZGEN).

Be advised that some of the data may have been changed since the first abstracts came out, but this is an expansive list of companies with data.
Read more

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , ,

    Subscribe to BioHealth Investor BioHealth Investor RSS Feed