Hello Lou,
Could you be kindly commend on Micromet Inc. (NASDAQ:MITI).
Your suggestion is the most appreciated.
Best Regards,

Binh

Hi Binh,

Thanks for the assignment. Micromet Inc. ( MITI NASDAQ) has had some positive news in the last few weeks. The development deal with Amgen Inc. ( AMGN NASDAQ) could potentially be worth close to $1 billion in payments dependent on reaching certain milestones in the lab.

The rub with any early stage biotech or pharmaceutical company is that they don’t have a product in the market. All of their efforts at the lab bench are very expensive.The way that they pay the bills is by partnering with a bigger company that has the financial strength to fund the development. If you look at the last eight quarters reported by the company they have lost money consistently.

 In the case of MITI’s deal with Amgen the agreement covers the advancement  of their BiTE platform in the treatment of solid tumors. BiTE mobilizes T- Cells in the human body to attack and destroy cancer cells. The potential reward is huge but the road is long and not without risk. The company currently has two Phase I trials  and a Phase II trial in progress. That’s a long way from approval of a compound for sale.

Examination of the charts will provide some guidance as to the future prospects for this stock.

The three year chart outlines the struggle that the shares have  had with  resistance along the 200 day moving average since January of 2011. Twice the stock failed to get through the barrier even on the Amgen news reported July 11, 2011.

The six month chart fails to provide evidence of an advance developing. The MACD and RSI are both indicating a continuation of the selling that started in mid July. Currently the stock is testing support along the 50 day moving average where we would like to see it hold.

What is evident from the charts is that MITI is not a buy and hold stock. There is enough volume on a daily basis to trade it efficiently. If we look at the MACD it signaled a buy in late March and a sell in late April for a 50% gain top to bottom. There was also another buy indicated in mid June.

A few of more things to have on your radar. In the last thirty sessions the shares only traded above the average daily volume over the last three months six times. Three of them clustered around the Amgen announcement. If we are going to get a sustained advance we need to see a healthy increase in volume.

The company is scheduled to report Q2 results on August 04, 2011. I would expect that they will report another loss but that isn’t an excuse to ignore it. Finally biotech stocks enjoy a period of seasonal strength from late June to mid September.

If you like the story follow the charts daily and watch the indicators for buy and sell signals. The name of the game with this one is to find the trades that will increase your wealth.

Bonjour !

Pourriez-vous commenter sur ses 2 titres (bourse de toronto):

Noveko international : EKO
Technologie D-box : DBO

Merci beaucoup
Manon

Bonjour Manon,

Merci pour l’allocation! If I had to chose between Noveko International Inc. ( EKO TSX) and D-Box Technologies (DBO TSX) I would have to take DBO. EKO had a huge spike in late March to early April of 2011 but it has not been able to hold on to its gains. DBO on the other hand has held onto its uptrend line. Lets consult the charts for a clear picture of what has been in the mix.

The three year chart for EKO depicts the long downtrend that the shares have been struggling with since November of 2009 when it hit resistance at $3.00. The spike up from the $0.30 lows in March of 2011  to the $1.00 range by early April was encouraging but not sustained.

The six month chart provides a number of patterns that call for profit taking when they are recognized. The RSI and MACD both signalled a shift in momentum from frenzied buying to steady profit taking as the stock retreated to $0.52. In addition a double top formed in April suggesting that the advance was over.

Currently neither the RSI nor the MACD are indicating a pending uptrend.

The three year chart for DBO illustrates a stock that has support along its uptrend line and has tested but not breached its 200 day moving average. There is resistance at $0.75 which it hasn’t been able to breakthrough but there does appear to be an ascending triangle forming. An ascending triangle suggests, but doesn’t guarantee, that a break above $0.75 is developing.

The six month chart for DBO  underlines the value of the MACD as a signal generator. In mid March of 2011 it indicated a buy at $0.50 and by mid April that it was time to sell at $0.70. Currently the MACD looks to be setting up for another buy signal.

Both of these stocks are microcap plays which by their very nature suggests a higher risk profile so please conduct your due diligence to make sure it meets your investor profile.

HAPPY CAPITALISM!

Is this a good time to buy more of this stock? It does not seem to go upwards?

Thank you for your advice

Nihal

Hi Nihal,

Protox Therapeutics Inc. (PRX TSX) is on the hunt for a cure for enlarged prostate in addition to  prostate and brain cancers. As a small cap company working through the clinical trials process there is an implied higher risk to their mission of getting a share of a market estimated to be worth billions of dollars. The smaller the market capitalisation of a stock the higher the risk.

The three year chart illustrates the case of stock that had a great run to a high of $1.10 in early January of 2010 but  has been selling off ever since. The MACD provided a great signal that the momentum was shifting to the downside giving investors plenty of time to book profits or preserve capital.

The six month chart isn’t what I would call robust. The April 29, 2010 announcement that PRX had signed a $75M license deal got the stock to pop but the move didn’t hold. The June 2, 2010 report of what the company called good results from their Phase 2B trial of their treatment for an enlarged prostate didn’t do a thing for the stock .

There is support at about $0.40 and a period of seasonal strength for bio tech stocks that is just beginning and runs until early September. As to your question regarding buying more. Its never a great idea to chase a stock that has chewed up your capital. Leave your position where it is and look for another opportunity to profit.  The main reason I say that is to encourage you to diversify your risk.

MAKE IT A HUGE G20 WEEKEND AND HAPPY CAPITALISM!

The charts not generating a buy signal

I HAVE BEEN WATCHING A COMPANY IN MY HOMETOWN OF BELLEVILLE ONTARIO. THE NAME IS BIONICHE LIFE SCIENCES.
THEY ARE CLOSE TO FDA APPROVAL ON A BLADDER CANCER DRUG AND THEY HAVE A DRUG THEY ARE MARKETING TO FARMERS TO GIVE TO THEIR CATTLE TO STOP THE PRODUCTION OF ECOLI THROUGH THE COWS WASTE.THIS STOCK IS NOW SELLING FOR AROUND .49 CENTS. CAN YOU TELL ME WHY IT IS NOT A GOOD BUY?
THANKS,
PAUL

Hi Paul,

I know the company quite well, having first meet Graeme McRae in 2000. Having said that the last 8 years for Bioniche Life Sciences Inc., BNC TSX, has really required an active trading strategy to capture what value was available at certain times. It hasn’t been a buy and hold stock.

The stock has been selling off since 2004 so all the progress the company has made at the lab bench hasn’t turned into profits for investors. The charts not generating a buy signal. I often get asked when will a stock start going up and the simple answer is when it stops going down. The Best time to buy a stock is when its going up and looks to continue that trend.

The other thing to keep in mind Paul is that the story may be better than the stock and you can’t trade the story so don’t fall in love with a story cause as we know love stinks!

Happy Capitalism!