Jun 13, 2016
Insider Alert: Redmile Group, LLC buys $FOLD for 477K
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Insider Alert: Redmile Group, LLC buys $FOLD for 477K
Know when to fold on the shorts
Just like Kenny Rogers said, you gotta know when to hold'em and know when to fold'em. Now he was talking about poker but the same thing applies to the stock market. You need to know when to sell when a trend has ended, either on the upside or the downside.
A good example of this comes up when looking at the chart of Amicus Therapeutics ($FOLD). It had a long run higher from November last year to a peak in August. That is when it gave a signal to sell. The Shooting Star Doji, a small body candle with a long upper shadow was your signal to sell. From that point the stock plunged, created a bear flag, and then plunged again.
It looked to be creating yet another bear flag when it broke to the upside out of it to start this week. If you took the Shooting Star as a signal to get short the name, the break of the bear flag was your signal to exit the short. Now the stock is pushing higher with support form the momentum indicators and opening Bollinger Bands® to continue. It also has 14% short interest which could trigger a short squeeze as more investors cover their shorts. Only that prior high from the Shooting Star stands in the way of your investment shooting higher.
More at Dragonfly Capital
Buying Glaxo's Biotech Stock Throwbacks Proves Profitable
An interesting side note from Monday's $840 million acquisition of Prosensa by BioMarin Pharmaceuticals: GlaxoSmithKline gave up rights to Prosensa's lead rare disease drug drisapersen in January 2014 because of negative results from a phase III study.
A lot of people (I'll throw myself in this group) believed Glaxo's exit meant drisapersen was dead, and you could have bought Prosensa shares for around $5 at the time. Today, BioMarin is buying those same shares for $17.75 with another $4 per share in potential payouts possible.
In November 2013, Glaxo also gave up on a partnership with Amicus Therapeutics to co-develop the rare disease drug migalastat. Glaxo's exit caused Amicus shares to sink to around $2 per share.
A year later, migalastat is very much alive and well, heading towards a likely approval in Europe. Amicus shares are trading around $7.50.
Bad decisions by Glaxo have provided wonderful buying opportunities for savvy, risk-taking biotech investors.
Here's one more example: Celldex Therapeutics has been flying high on the positive outlook for its brain tumor drug rindopepimut. Pfizer had rights to the drug but returned it to Celldex in 2010.
Conventional wisdom often dictates that Big Pharma knows best, meaning they only license biotech drugs which work and get rid of those that don't. Reality is a lot more complicated. For Prosensa, Amicus and their loyal shareholders, the departure of Big Pharma Glaxo wasn't the end, it was a new beginning.
Nod of Respect and Thanks to a Biotech Veteran
John Crowley is Chairman and CEO of Amicus Therapeutics. He’s also a commissioned officer in the U.S. Navy Reserve, and just returned from temporary active duty, stationed in Afghanistan.
It’s tough enough running a small biotech company seeking to develop a treatment for a rare, life-threatening disease. Managing a company while also serving your country thousands of miles away in Afghanistan is pretty amazing.
Welcome back, John, and thanks for your service. And thanks to all the members of our armed forces on this Veteran’s Day.