If you're looking for a riches-to-rags-back-to-riches story to trade, then Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) may well be the first and last name to consider. This biotech stock has gone from being on top of the world to the bottom of the barrel to, well, maybe starting to claw its way back toward the top of the heap as of this week. While the rebound from ARIA is still a little fuzzy, the scales seem to have finally tipped in a slightly-bullish direction.
You probably know the company, even if you can't quite recall why. Ariad Pharmaceuticals was the biopharma outfit that halted trials and sales of its cancer drug, Iclusig, in October after it appeared it caused a risk of potentially-dangerous blood clots. ARIA shares plunged from $17.14 to $5.83 in one day on the news, but ultimately fell to a low of $2.15 in the aftermath of the announcement, once traders really began to think about the impact and outlook for the company.
As is so often the case when bad news for a biotech pops up, the market may have over-reacted and assumed more than the worst-case scenario as it was handicapping the downside from Ariad.
For starters, the European Medicines Agency has maintained its approval of Iclusig for leukemia. In the meantime, the FDA has given special permission to patients who have already shown a benefit from using the Ariad Pharmaceuticals drug to continue using it... a tacit hint that the agency doesn't see a screaming risk (relatively) with Iclusig. That's not to say a reinstatement is a foregone conclusion, but it's not out of the realm of possibility.
And, bear in mind that even though Iclusig was Ariad Pharmaceuticals' flagship product, it's got another drug (AP26113, for NSCLC) in the pipeline. And, even of Ponatinib/Iclusig is indeed shown to be the cause of blood clots, that's not to say it can't be reworked as a treatment for leukemia, or any of the other illnesses it's currently in trials to treat.
With all of that being said, the biggest reason would-be investors would want to start wading in now has little to do with the company's news, and everything to do with the fact that ARIA shares are finally starting to perk up, telling us the market is starting to see that it overshot when it was selling the stock a few weeks ago.
The chart below tells the story. Shares got whacked in October, but as of today are knocking on the door of a higher high. If the stock can clear the hurdle at $5.30, that could really light a fire here. And, given how Ariad Pharmaceuticals, Inc. shares are now supported by the 20-day moving average line, and they're attacking the $5.30 on rising volume. It all says the bulls are just looking for a reason to bust out here, and that's a very encouraging sign.
5 Best Penny Stocks To Buy Right Now
For more trading ideas and insights like these, be sure to sign up for the free SmallCap Network newsletter.
No comments:
Post a Comment