Weekly thought on $IBIO, $INSG, $LRAD

Before you read on, please be aware that the analysis below is my opinion only and may include flawed assumptions and inaccuracy of logic; therefore, caveat emptor applies here.  Furthermore, all emphasis (color-coded, boldness, and underlined) on the excerpts are my own.

The SP500 completely reversed last week red bar and resumed its path to the upside. sp-500_dailyThe above daily chart showed a green bar on Friday, reaching for another new high. But Friday new high did not come without a hiccup. See that red bar under the down blue arrow?  That was Thursday price action that caused me a bit of grief. Let me explain.

Below is a 5-minutes SP500 Chart displaying the price action on Thursday morning after the open (inside the yellow box w/red border.) SP-500_5MinOn Thursday morning, as seen on the 5min chart above, the SP500 dropped speedily after the open. Each five minutes bar followed one another southbound and penetrated the 5min 79 & 89 MA supports (blue & red dash lines) like a hot knife through butter.

Without a doubt, I got spooked and was instantly bearish on the broad market in general, and I wanted to short the SP500 using $SPXU.  But to do that, I needed to lighten up my portfolio to reduce risk.  Out of the three stocks in my port, I chose to cut $INSG because it had already proven me wrong by dropping below $5 in the first half of the week. Last week, I expected $INSG to hold $5. Thus, when $INSG took out $5 and reached as low as $4.79 on Tuesday, I gave it a high probability of price going back below $5 on Thursday morning even though price climbed back to close above $5 on Wednesday. I sold $INSG with the hope of repurchasing it below $5 when the price reached my stop.  Around the same time, I also bought $SPXU.

Needless to say, the SP500 finally settled down and began to climb back in the late afternoon.  After seeing that $INSG only touched $4.99 inside the first half-hour after the open and stayed above $5 most of the day, I quickly bought back $INSG when I closed my $SPXU to cut my losses.

I’m going to apply the same format as last week using the hunter analogy of following the track of the big game.  This week, more tracks revealed itself

$IBIO

New information (tracks):

  1. Track detail #1
    1. Latest article from iBio, “Reducing Fill-Finish Wait Times” published on July 25, 2019.
      1. IBIO_CDMO_FF
      2. IBIO_CDMO_FF3
      3. IBIO_CDMO_FF4
      4. IBIO_fill-finish2
  2. Track detail #2
    1. A recent article, “Biosimilar Provisions Feature Heavily in Senate Finance Bill,” published on July 24, 2019.
      1. IBIO_BiosimilarSaving
  3. My comment:
    • Track detail #1.1 highlighted iBio CDMO as a plant-based biopharmaceutical CDMO leader by offering benefits such as:
      • FastPharming protein expression & glycan engineering tech
      • Consistently and rapidly generate high-quality biologics using:
        • automated hydroponic systems
        • State-of-the-art facility in Bryan, Texas
      • cGMP contract manufacturing
      • Factory solutions for the design and construction of facilities for plant-made biopharmaceuticals
      • Offer process development and bioanalytical services
    • Track detail #1.2 highlighted the cost saving of using iBio’s plant-based system:
      • Estimated that cost of goods (COGS) for an mAB produced by iBio  = 50% less than published COGS values for mAbs produced using CHO systems (aka mammalian cell system)
    • Track detail #1.3 highlighted client supports, such as:
      • Cloning of the necessary vectors
      • process development
      • biomass production
      • protein extraction and purification
      • buffer exchange
      • formulation
      • automated/manual sterile fill and finish services
      • conduct feasibility studies
    • Track detail #1.4 highlighted the type of customers iBio’s tech benefits:
      • Early-stage biotech
      • BPs (Big Pharma companies)
      • Universities
      • Spinouts
      • Government agencies
      • Well-suited for:
        • developing countries
        • rapid response to pandemics
    • In summary, the article highlighted the reasons why iBio’s plant-based system is ready to provide cost-saving in biologic drug manufacturing.  The days of high price biologic drugs as a result of massive capital expenditure in mammalian cell systems is about to end thanks to off-patent of the popular brand name biologic drugs in recent time and beyond.
    • Politically speaking, track detail #2.1 highlighted the unstoppable momentum of the biosimilar.  Cost-saving in biologic drugs is possible with the biosimilar.  And biosimilar using plant-based tech can result in even cheaper biologic drugs.
      • While the U.S. market is moving slowly toward the biosimilar market, CC-Pharming of China is going full-speed on using iBio’s plant-based tech to provide affordable biologic drugs to its massive population.  Currently, as mentioned in my last week blog, CC-Pharming is in the process of designing a large-scale facility.

MY PREDICTION based on the track details is that iBio’s plant-based technology is becoming more relevant as time passes.  By the time CC-Pharming receives China’s FDA approval to use its biosimilar drugs manufactured from its large-scale highly automated facilities in China, iBio’s revenue-sharing deal with CC-Pharming will have the potential to transform iBio into a BP.

As I repeatedly stated before, $IBIO is NOT a trading stock due to its tiny float, it is a stock you buy and hold for the inflection point when iBio’s tech becomes TOTALLY relevant, which is not too far from now in my opinion.

$INSG

New information (tracks):

  1. Track detail #1
    1. Nokia Corp reported earnings on July 25th, Thursday
      1. INSG_NOK5G
      2. INSG_NOK_dailyChart
    2. My comment:
      1. $NOK was my original plan to participate in 5G until its downward movement breaking below $6, eliminating it from my consideration. However, Nokia’s Thursday earnings emphasized an uptake on the 5G (track detail #1.1) resulted in a gap up on its price action on Thursday.  It was because of $NOK gap-up that I immediate bought back $INSG on Thursday afternoon after the SP500 halted its declining momentum in the afternoon.

MY PREDICTION based on $NOK price action is that $INSG will follow the same gap-up pattern after its Aug 6th earnings call. I expect to hear more uptakes from other operators looking into Inseego’s 5G product lines.

Technically speaking, $INSG’s handle formation within its five years Cup & handle pattern (C&H) continues to look good with a green bar for the month in the monthly chart below..  INSG_MonthlyAt the same time, the flag-pattern also continues to look favorable for a breakout soon with $INSG price trading near the top parallel line of the flag-pattern.

I am just happy to jump right back into $INSG on Thursday afternoon even though it cost me a bit more to buy back the shares.  The extra premium I paid to get back in is all part of my trading expenses.

$LRAD 

New information (tracks):

  1. Track detail #1
    1. The news, “Supreme Court allows Trump to tap $2.5B in Pentagon funds for border wall” released on July 26, 2019
      1. LRAD_BorderWallSupremeCt
  2. Track detail #2
    1. Per Q2 2018 earnings call transcript under Q&A
      1. LRAD_Q2 2018 Q&A BorderWall
  3. My comment:
    1. Besides the massive potential of LRAD’s new mass-notification system with its Genasys software counterpart, LRAD’s reasonable probability (3 out of 5 or 60%) of being part of the US/Mexico border wall may also be a significant catalyst for the price to rocket much higher from current $4 baseline.
    2. Track detail #1.1 highlighted the September 30 as the deadline for Defense Dept to transfer the money from Pentagon to build the border wall, this means LRAD may hear about the decision whether its long-range acoustic devices will be part of the border wall before the end of September.  With 60% favorable odd per track detail #2, there is a reasonably good chance here.

MY PREDICTION is that LRAD’s long-range acoustic devices will be selected to be part of the border wall only because the U.S. Army, Navy, and Coast Guard are already using LRAD’s products.

Regardless of the controversy surrounding the practicality of the border wall, Friday’s Supreme court decision provides an enormous opportunity for LRAD if it is being selected as part of the border wall.  Needless to say, giving the size and extent of the border wall, $LRAD price can go banana if LRAD’s devices are selected.

Technically speaking, $LRAD approaching the end of July with a solid green bar breaking out of the five years old Cup & Handle pattern.lrad_monthlyIf the investors like the Supreme Court decision, $LRAD could spike higher before the end of July, and the green bar would look even BETTER!

Thanks to uptake on $LRAD and $INSG, my port gained a bit more this week.

Current positions (in alphabet order):

Stocks = $IBIO  $INSG  $LRAD

Options = $TRXC (call);

Up >20% YTD

My 2 cents

From my camera:

009



Categories: Daily trading Journal, trading journal

Tags: , , ,

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