Among the biggest winners in Monday's early trading are
Peregrine Pharmaceutical (Nasdaq: PPHM)
Century Aluminum (Nasdaq: CENX).
The key to find winning investments in biotech: focus on
companies that can handily exceed the increasingly stringent
restrictions placed on Phase II trials. As noted in
today's look at falling stocks
, troubling Phase II results are tripping up
Geron (Nasdaq: GERN)
this morning. On the flip side,
is posting a nice 7.5% gain today precisely because Phase II
results appear favorable. The company has been testing bavituximab
(Bavi), in conjunction with docetaxel (a biotech analogue version
of the drug taxol, which is now thegold standard of treatment for
many cancer tumors).
In recent months, it has become increasingly apparent that Bavi
was quite helpful in boosting the efficacy of docetaxel, boosting
the stock from $0.50 in early July to above $4 in recent sessions.
The company announced on Friday, Sept. 7, that the
Bavi/docetaxel combo led to 11.1 months of survival, compared with
5.6 months for docetaxel alone.Shares are moving higher again today
as management confirms what interim data had shown: that Bavi works
quite well. "The statistically significant overall survival seen in
that study is an obvious green light for us to begin plans to
advance the program into Phase III and goes a long way toward
validating the technology platform," noted the company in a press
Frankly, it's a bit hard to figure out where share go from here
-- especially after rising nearly 50% in the last two trading
sessions and nearly 800% in the third quarter. The company'smarket
value now exceeds $500 million, which needs to be measured against
the totalmarket opportunity for Bavi. Peregrine has much work ahead
of it, including the ability to line up marketing partners that can
fund further clinical development, and equally important, the
ability to prove that Bavi works well in Phase III clinical trials,
where safety concerns are taken into greater account.
On Friday, Sept. 7, investors were treated to an 8.5% gain in
Freeport McMoran (
. Expectations have been building that looming action from
the Federal Reserve will light a fire undercommodity stocks, as has
been the case with prior rounds of quantitative easing. (I have
doubts that the commodity rally can last as economic troubles in
could erode demand
Still, we can consider Friday to be "copper day" thanks to
Freeport's strong one-day gain. And today is shaping up to be
"aluminum day." Fed-induced hopes have pushed shares of
above $9 for the first time since mid-May, and rival
is up an impressive 7% today.
As is the case with Alcoa, Century Aluminum has been working
throughout 2012 to lower its cost structure. The company is
expected to lose around $0.45 a share this year, assuming aluminum
prices stay below 90 cents per pound (which appears to be the basis
for many analysts' forecasts). Well, thespot price of aluminum just
moved back up above 90 cents for the first time since mid-May,
largely based on hopes for a fed boost to commodities. On a
fundamental basis, there's actually little reason for aluminum --
or any other commodities to keep rising. So caution here is
Action to Take -->
Peregrine Pharma's strong recent gains suggest that long-term
investors now sitting on a bigprofit may look to sell some of their
positions. So it may be wiser to see if the stock consolidates
lower in the near-term, giving you the chance to learn more about
Bavi, and the size of the market opportunity it faces.
If you are looking at aluminum producers, then why not go with
Alcoa, which in many respects is the industry's strongest operator,
with the lowest-cost smelters and the most robust finished products
business. Century Aluminum is a big gainer for today, but Alcoa is
the class of the field.
-- David Sterman
David Sterman does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC does not
hold positions in any securities mentioned in this article.
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