October 21, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Stocks can take a leap for a variety of reasons, and in the biotech industry, that is often connected to some catalytic event—positive results in a clinical trial, deal news, or the launch of a drug. But sometimes stocks overcome resistance points and take off for more technical reasons. Roberto Pedone, writing for The Street, discusses four biotech stocks that he believes are on the edge of a breakout.
South San Francisco’s Calithera Biosciences is a clinical-stage drug company focused on developing compounds against tumor metabolism and tumor immunology. Its lead compound in tumor metabolism is CB-839, a first-in-class inhibitor of glutaminase, an enzyme critical to tumor metabolism. It’s currently in three Phase I trials in solid and hematological tumors. It also has a preclinical program focused on tumor immunology, working to identify and develop compounds that inhibit the enzyme arginase.
Calithera has been on an occasionally volatile downward slide. Shares traded on November 6, 2015 for $10.02, hit $5.42 on June 3, 2016, and is currently trading for $3.
Pedone, for technical reasons, believes it’s likely to go up. “Traders should now look for long-biased trades in Calithera Biosciences, if it manages to break out above some near-term overhead resistance levels at $3.07, to its 50-day moving average of $3.14, then above more resistance at $3.20 with high volume.”
New York-based Tonix Pharmaceuticals is working on developing drugs for common disorders of the central nervous system. Its lead program, TNX-102 SL, focuses on post-traumatic stress disorder (PTSD). In May 2016, the company showed positive topline results from a Phase II study in PTSD. But it September, it reported mixed topline results from a Phase III trial of TNX-102 SL in fibromyalgia. It didn’t hit statistical significance in the proportion of patients reporting a 30 percent or greater reduction in pain. But it did show statistically significant effects on pain using other statistical approaches.
Tonix traded for $7.79 on December 29, 2015, dropped to $2.81 on February 17, 2016, hummed along at about that price until September 6 when it dropped to $0.92. It is currently trading for $0.69.
Pedone writes, “If you take a glance at the chart for Tonix Pharmaceuticals, you’ll notice that this stock recently formed a double bottom chart pattern, after shares found some buying interest at 60 cents to 61 cents over the last few weeks. Following that potential bottom, this stock has now started to spike higher and flirt with its 20-day moving average of 68 cents a share. That move is now quickly pushing shares of Tonix Pharmaceuticals within range of triggering a big breakout trade above some near-term overhead resistance levels.”
Cambridge, Massachusetts-based Editas Medicine is focused on using CRISPR technology, a type of gene editing technology, to develop treatments for genetic diseases. It has programs in Leber Congenital Amaurosis 10, Usher Syndrome 2alpha and HSV-1, cancer, Beta Thalaassemia, Sickle Cell disease, Duchenne Muscular Dystrophy (DMD), Cystic Fibrosis (CF) and Alpha-l Antitrypsin Deficiency.
Editas traded on April 5, 2016 for $42.04 and is currently trading for $14.70.
Pedone also points out the “double-bottom chart pattern,” and various technical indications that he believes the stock may be ready to breakout. “Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 304,491 shares. If that breakout kicks off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $15.98 a share to $16.42, or even $17.65 to $18.45 a share.”
Ann Arbor, Michigan-based ProNAi Therapeutics is focused on immuno-oncology. Its lead drug candidate, PNT737, is an inhibitor of Checkpoint kinase 1 (Chk1), which regulates the DNA Damage Response (DDR) network. On September 27, the company announced it had licensed worldwide rights to develop and commercialize PNT737 from the CRT Pioneer Fund. The compound is currently in two Phase I trials sponsored and managed by the Cancer Research UK Centre for Drug Development, led by The Institute of Cancer Research, London, and The Royal Marsden NHS Foundation Trust.
ProNAi traded on November 27, 2015 for $18.31, dropped to $6.40 on June 2, 2016, and plunged to $2.07 on June 6. It is currently trading for $1.77.
Pedone writes, “If you look at the chart for ProNAi Therapeutics, you’ll notice that this stock has been consolidating and trending sideways over the last five months, with shares basically moving between $1.70 on the downside and $2.25 on the upside. Shares of ProNAi Therapeutics have experienced a number of unusual high-volume spikes to the upside over the last few weeks that have pushed the stock right into some key moving averages, and into range of breaking out above some key overhead resistance levels.”
