Weekly thought on $AMRN, $ARCH, $BIOC, $CARA, $DMRC, $GWPH

Although this is the 2nd correction week (red bar) after six green upward bars, the correction this week still has a higher low than last week.

SP-500_weekly

Price still closed above the 79 MA support and the week range is still inside the lower part of the Andrew Pitch Fork upward channel.  So, I’ll call this week a normal correction week that is still within the bull territory.

$AMRN finally broke thru the downtrend line and headed higher.  From the weekly chart, we are also looking at a possible Cup & Handle breakout in the making.

AMRN_weekly

A breakout of $1.71 and a close higher than it will confirm a Cup & Handle breakout which in turn indicates a possible change of the long-term direction.  Remember, all these famous breakout patterns (Head & Shoulder pattern is another example) only give you a good odd of the directional change AFTER a breakout is confirmed, not before.  Having said that, Amarin is at the cusp of breaking out of the current Cup and Handle pattern set-up. I’m expecting a confirmed breakout next week.

Fundamentally speaking, there are 3rd parties’ researches adding to the growing body of clinical and pre-clinical data relevant to the use of EPA with statins.  Recent news included the following:

New Clinical and Pre-Clinical Data Presented at American College of Cardiology Meeting on the Effect of EPA Therapy in Statin-Treated Patients and on Endothelial Function in Exploratory Studies

New study suggests combination of statin and omega-3 fatty acid may provide cardioprotective effects-Dual treatment shown to reverse endothelial dysfunction in human cells

I’m wondering if the public investors or “will be” investors realize the magnitude of the revenue size after Reduce-it Trial proves overwhelming efficacy in reducing MACE (Major Adverse Cardiovascular Events).  Currently there are 200 million statin prescriptions being written by doctors annually.  Below is an excerpt provided by the StatinUsage.com

Doctors write more than 200 million prescriptions for statins in the U.S. each year. While statins are highly successful in reducing cholesterol levels, only one-third of people with high cholesterol have their cholesterol under control. This is a major public health concern, as the direct medical costs for cardiovascular disease (CVD) in the U.S. are expected to triple from $273 billion currently to $818 billion in 2030.

Current Amarin’s Vacespa weekly prescription rate is about 14K per week which translated to 728,000 annually (14,000 x 52).  A successful Reduce-it trial will open the door for doctors to “include” Vascepa prescription along with statin prescription to further enhance cardiovascular health to reduce MACE.  Imagine even if only 10% of the 200 million statin users are prescribed Vascepa by doctors after FDA approval (and I’m being conservative), you are talking about 20 million Vascepa prescription numbers annually.  I don’t need to tell you the mega-potential price appreciation when that happen.

Granted that the interim review has only just begun on the Reduce-it trial, but the risk/reward giving current $1.71 price and the “after success RI-trial” stock price is so WIDE that it will violate the principle of investment not to place the bet.

From my personal experience (take it as a grain of salt), ever since I start taking Vascepa three years ago, I “no longer” worry about my cardiovascular health.  In fact, despite the size of the pill, my body & mind look forward to taking my 4 grams (2 pills each at lunch and dinner) of Vascepa every day.  I mentioned this ’cause my body tends to “protest” on other pills I took by making it difficult for me to swallow them.  With the Vascepa pill, the swallowing effort is almost non-existent.

$ARTH has another fantastic week and price closed next to the previous high of 2014.

ARTH_weekly

Looking over the 2-1/2 years weekly chart above, you can almost see a very wide Cup & Handle breakout here.  In fact, I should call it the “Bowl & Handle breakout” ’cause the pattern resembles a bowl due to the wider gap between the first two previous highs of early 2014 and mid-2015.  From my experience and observation, the longer it takes for any Cup & Handle (Bowl & Handle in this case) to form, the more powerful is the breakout and the more chance that directional change is ensured.

Fundamentally speaking, the commencement of Arch’s first human trial using AC5 medical device has begun and the conclusion will be known by this summer.  Since this is a medical device and NOT a drug, the odd of success is high per my book.  Let’s “pretend” this AC5 is a “hardware” medical device that can clamp a blood vessel and stop the bleeding.  So ask yourself that if I clamp this medical device on an animal blood vessel and stops the bleeding successfully, what is the odd of success if I clamp the same medical device on a human blood vessel?

“Wait! But this is not a hardware device.  It is a clear liquid!  Wouldn’t there be ‘reaction’?”

Excellent question!  And that is why recent announcement (see below headline with link) helps increase the odd of success:

Arch Therapeutics Obtains Favorable Safety Data for AC5 Surgical Hemostatic Device(TM) in Skin Irritation Testing in Humans

If you review the Arch’s clinical filing submission here->  filing in the clinical trials government website, you will see that the primary outcome measure below:

Primary Outcome Measures:

  • Number of serious adverse events during the 30 days of follow-up [ Time Frame: 30 Days Post Procedure ] [ Designated as safety issue: Yes ]

    Local reactions to clinical investigation product (pain, edema, rash, cellulitis, localized infectious processes, other) detected during clinical investigation follow up.

    Systemic reactions after administration of clinical investigation product (fever, allergic reaction, anaphylaxis or any clinical untoward event) detected during clinical investigation follow up.

A successful trial result this summer means that AC5 provides NO reaction on human skin.  It will be as neutral as a hardware device. Except that a liquid bandage (AC5) is a whole LOT more efficient and flexible to use to stop the bleeding (and also as a sealants to stop leaks) in many which way that a normal medical hardware clamps or stitches cannot do.

Recent announcement of patent allowance: “Arch Therapeutics Announces Notice of Allowance for Composition-of-Matter Patent Covering Self-Assembling Peptides” provides clues on the mind-blogging opportunities of AC5:

The applications and rights cover self-assembling compositions and methods of making and using such compositions for medical applications including stopping bleeding; preventing the movement of bodily fluids, contaminants, etc., within or on the human body; preventing adhesions; treatment of leaky or damaged tight junctions; and reinforcement of weak or damaged vessels, such as aneurysms, with patents covering this technology in the United States, Europe, Japan, Canada, Australia, Hong Kong and China. Additional patent applications are pending in multiple jurisdictions.

Now, do you blame me if I postulate the coming “Bowl & Handle breakout” is imminent?

$CARA ended the week with a weekly doji bar.

CARA_weekly

Since this is the beginning of a bounce and resistance of $8.3 is still far away, I expect this doji bar to be a “pause and continue” signal rather than a potential “reversal” one.  Next week price action will confirm the direction.

Fundamentally speaking, Cara Therapeutics is waiting for FDA to lift its “automatic” clinical hold but I’ll pull an excerpt from CARA’s recent earning transcript to explain the basic:

So 2015 was certainly a very productive year for us at Cara. We continue to execute on our clinical development plan and build out a broader set of indications for CR845. Starting with our lead indication for I.V. CR845 in acute post-op pain, we initiated our first adaptive pivotal trial CLIN3001 in September of last year. Examining repeat doses of CR845 administered both prior to and following abdominal surgeries. As we discussed with you a couple of weeks ago, we recently announced that the trial has been placed on a clinical hold, following a limited number of patients reaching a pre-specified stopping rule related to increases in serum sodium concentrations to the mild to moderate hyponatremia level that is greater than or equal to 150 Millimoles Per Litre and I’ll remind you the normal range is 135 Millimoles Per Litre to 145 Millimoles Per Litre.

Again to remind you that there were no severe adverse events observed in these patients and all sodium levels will result to normal levels within 24 hours through standard fluid management protocol. Nevertheless, we’re working through a review of safety data by both us and the trial’s independent data monitoring committee and we’ll be discussing this with the FDA shortly with the aim of reinitiating this trial in Q2 of this year.

Source: http://seekingalpha.com/article/3957573-cara-therapeutics-cara-ceo-dr-derek-chalmers-q4-2015-results-earnings-call-transcript?part=single

Thus, in my opinion, due to no severe adverse events observed in the patients with high sodium levels, it’s a matter of time before clinical hold is lifted once Cara and FDA agreed to the modification of the Phase 3 trial that will eliminate the repeat of increase in serum sodium concentration.

$DMRC has another disappointing week with a long red-bar.

DMRC_weekly

This week down bar confirmed last week red bar (with a high tail) as a possible topping formation.  Due to recent CFO and CEO sales of stock at $30+ in late March, I’m not feeling the vibe that this stock is going to have a good 1st quarter earning update in late April.  I’m  interpreting the sales of stocks by Digmarc’s executives as “no significant” news on coming 1st quarter update.  Otherwise, why sell in March when they can sell it in late April or May to take advantage of good news to come.  Due to my using this common sense logic, I sold the rest of my $DMRC shares to get out of the way for coming earning update.  Since I still believe in the fundamental story of Digimarc barcode, I’ll look to buy back shares cheaper.

$GWPH closed with a green bar for the week.

GWPH_weekly

Effectively, the downward momentum from last week has been cancelled by this week up bar.  I’m seeing a “flag” pattern here.  This is a beautiful flag pattern due to the gap up that provided a straight pole to support the flag.  I expect price to break out of the flag pattern to the upside soon.

Fundamentally speaking, GW Pharmaceuticals has a winning card in its hand- Epidiolex.

I’m back in $BIOC this week.  Why do I get back in when price hasn’t been very bullish recently?

BIOC_weekly

It is because of the weekly doji bar last week at support level.  Despite a red bar this week, I expect price to bounce soon from support at $1.25.

Fundamentally speaking, I’m bullish on liquid biopsy; it’s that simple.

While I’ve strong fundamental reason behind my pick of the stocks in my portfolio, I like to balance them with the technical reading on the chart.  This week, $DMRC chart told me to get out for the time-being so I did.  But that doesn’t mean I’m abandoning it.  Far from it, I’ll look for opportunity to buy them back cheaper.

I’ve another great week in my port due to the upside movements from $AMRN, $ARCH, and $GWPH.  If price continues to advance from here, I’ll recover my 2015 losses in no time at all.

My 2 cents.

From my camera:

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Categories: Daily trading Journal, trading journal

Tags: , , , , , ,

6 replies

  1. FYI DMRC CEO sales are 10b plan and tax driven and he has no control of timing and are unrelated to any business factors. CFO sale also tax related to personal situation and also no consideration of business activity or timing. The short attacks appear to getting to you a bit, but the lack of understanding behind the sales certainly adds to them. As long as the massive short exists you have to expect it, but more confirmation of your prior beliefs here should show up through the GS1 conference and beyond. Your thesis here for the most part has been correct and things should develop and play out in line with your prior statements in reasonable time. Best of luck to you!

    • Sandy, thank you for your comment. Regarding the CEO 5,834 shares sold at late March, it was not part of the 10b plan. You could only assume that this and the CFO sales were for tax reason. There is no doubt of the continued short attacks but I deduced that without any major news regarding adoption by major brands or big box retailers since the January Big Retail show, the incubation period may take a bit longer. The shorts will maximize this “slow period” and take the initiative to grease the road for some investors to exit which I see is working. I don’t believe the 8 days non-stop drop is all from shorts walking down the price. I believe it is a combination of shorts greasing the road with opportunistic investors existing looking for cheaper price like I do. I agree that giving more time, Digimarc will take off. Meanwhile, I’m taking a risk of missing the coming bounce by moving myself out-of-the-way to see if I can jump back in for cheaper shares.

      After riding the $DMRC for quite awhile in the buy-and-hold mentality without locking in gains when it went to $40+, I decide to change my tactical plan from buy-and-hold to short-term trading to take advantage of the volatility created by the shorts’ urgent effort to break the support.

      My thesis on Digimarc is still intact and I only wish to rebuild my position with a better average price while riding out the Digimarc incubation period.

      Cheers!

      • Agreed for the most part. If you notice, the extra shares sold have been done consistently before in addition to the 5k per month a couple of times a year for tax and funding of the options. Not to split hairs too much, but this was nothing new and they have nothing to do with business activity or timing. I am suspicious of every move like this and we have had many given the known circumstances and history of the short here. I expect we get much more volatility as they do all they can to shake things while success and profitability becomes undeniable. We’re getting close.

      • Since you brought up CEO’s past “additional” sales of stock outside the automatic 5k monthly sale, the one that established a pattern which I’m trying to avoid this time is the 4,485 additional shares the CEO sold on Sept 21st, 2015 for $37.xx. A month later, after the Q3-2015 earning update, price collapsed.

        Having seen the volatility and the opportunities that I missed by the “buy & hold” strategy, I decided to take a more proactive action by trading this one. Especially when the shorts are so generous to throw good money after bad to push the price down which allow investors like me to pick up shares at cheaper price. I believe that no matter how hard the shorts try to push this one down, they will never be able to exit in mass ’cause there simply ain’t enough sellers to accommodate their covering. The only way the shorts can cover is that Digimarc barcode fails to take off. Based on my thesis, Digimarc will change the landscape of the retail world and the shorts are just splashing hard on the water with their short attempts in a whirlpool that is going to suck them into oblivion eventually.

        Thanks for the discourse.

  2. So you made loss in 2015… Thanks

    • With a biotech meltdown last year thanks to political firestorm created by Martin Shkreli when he raised the price of a drug called Daraprim from $13.50 a pill to $750 overnight, I took quite a hit despite my effort to cut losses. LRAD also hurt when the company failed to win the bid on installing their mass notification system in one of the large Middle-East cities.

      No one can win all the times, but in time, future win will make up for the losses as long as I persist in my endeavor to find the next big runner.

      Thanks for the comment.

      Cheers!

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