Scott Matusow | Dec 13, 2012 04:59AM ET
Trading biophama stocks before a catalyst event, if done correctly, can be a very profitable proposition. Some traders and investors who enjoy bringing more risk into play often times will hold through the actual catalyst event. While this does bring more risk into play, the reward from engaging in this can be a massive one.
Today, I list a few small-cap companies and their respective catalyst events for traders to consider. I have included the stock charts with commentary for them to add further support as basis for these long side trades.
Ziopharm Oncology (ZIOP) is a cancer biotech with pivotal P3 results expected during Q1 2013 for lead pipeline product, ZYMAFOS, in addition to several other compounds in early-mid stages of clinical development and another ongoing P3 trial for ZYMAFOS that begin this past summer.
Yesterday, a Jeffries analyst lowered their price target for the company's stock to $4 from $7, cutting the stock from a buy to a hold.
The Jefferies analysts 20% of the company's stock, support late stage clinical testing, then if successful, lever these companies at a discounted rate.
GSK's average price for its 20% stake in Amicus is around $5 a share. With the Amicus current market cap at $272.46M, and based on GSK's prior acquisition price-paid history of 100% offers for the target acquisition company's last closing price, It's my opinion the rest of the shares would go for around $12 - $14. Furthermore, on positive data, I expect a temporary price gap to around $10 a share, then the stock price settling in somewhere around $7.
The chart seems to indicate a reversal to the upside is currently underway, and with the company already being undervalued, it's a good bet in my opinion that we will see $6 very soon. I Noticed in the current 3rd wave trend of trading, that the lows have been higher, and the highs have been lower, and I have drawn the lines in the chart above to represent this. The 6 month 011 Phase III data could be released anytime before the end of this year, so traders should take note of this.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.