NEW BULLISH Plays
Advaxis, Inc. - ADXS - close: 12.73 change: +0.84
Stop Loss: 10.75
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on October -- at $---.--
Listed on October 28, 2015
Time Frame: Exit PRIOR to earnings in mid December
Average Daily Volume = 1.4 million
New Positions: Yes, see below
Biotech stocks are starting to rally again after weeks of consolidating sideways. ADXS is also on the move after building what looks like a significant bottom over the last month.
ADXS is in the healthcare sector and part of the biotech industry.
According to the company,
"Located in Princeton, N.J., Advaxis, Inc. is a clinical-stage biotechnology company developing multiple cancer immunotherapies based on its proprietary Lm Technology(TM). The Lm Technology(TM), using bioengineered live attenuated Listeria monocytogenes (Lm) bacteria, is the only known cancer immunotherapy agent shown in preclinical studies to both generate cancer fighting T-cells directed against a cancer antigen and neutralize Tregs and myeloid-derived suppressor cells (MDSCs) that protect the tumor microenvironment from immunologic attack and contribute to tumor growth."
"Advaxis's lead Lm Technology(TM) immunotherapy, axalimogene filolisbac (ADXS-HPV), targets human papillomavirus (HPV)-associated cancers and is in clinical trials for three potential indications: Phase 2 in invasive cervical cancer, Phase 1/2 in head and neck cancer, and Phase 1/2 in anal cancer. The U.S. Food and Drug Administration (FDA) has granted axalimogene filolisbac orphan drug designation for each of these three clinical settings. For additional information on Advaxis, visit www.advaxis.com."
Shares of ADXS peaked in June 2015 near $30.00 a share. That capped an incredible run from about $3.00 in late 2014. When biotech stocks collapsed in August and September ADXS was not spared. Shares eventually found support in the $10.00 region. If you look closely ADXS spent most of October consolidating sideways in the $9.50-12.00 range.
A few weeks ago there was an important development. The U.S. FDA issued a verbal hold on ADXS's leading treatment due to complications from one patient.
What ADXS does sounds like science fiction. They used modified Listeria bacteria to trick the body into attacking and killing cancer cells. One patient in their clinical study used ADXS' as a treatment for her cervical cancer back in 2013. This past summer (July 2015) she entered the hospital with complications and died of her cervical cancer. The FDA issued a hold on ADXS' trial because the hospital found strains of listeria in her system (two years later). Now this particular case may be unique since the patient had some orthopedic implants from a car accident that may have provided a spot for the listeria to hide without producing an infection.
This FDA hold sparked some serious selling in after hours trading with ADXS down more than -20% on this news. The next day (October 7, 2015) shares of ADXS gapped down at $8.10 and rallied back to $10.51 by the closing bell. Since this headline investors have been buying the dips in the $9.50 area. It's starting to look like all the bad news may be baked in. Meanwhile ADXS believes the FDA hold is a temporary setback.
Shares of ADXS have been showing relative strength the last few days as biotech stocks move higher. If this market rally continues ADXS could be a significant outperformer.
Veteran Premier Investor Newsletter readers already know that we consider trading biotech stocks to be higher-risk, more aggressive traders. They are high-risk, high-reward opportunities. The right or wrong headline can send a biotech stock crashing or soaring overnight. The fact that ADXS recovered so quickly following this bad news is encouraging and might suggest the "weak hands" in the stock have already exited.
Today's intraday high was $12.81. Tonight we are suggesting a trigger to launch small bullish positions at $13.05. I suspect the $16.00 level might be resistance but the point & figure chart is forecasting an $18.00 target. Remember, this is an aggressive trade.
Trigger @ $13.05 (use small positions to limit risk)
- Suggested Positions -
Buy ADXS stock @ $13.05
- (or for more adventurous traders, try this option) -
Buy the DEC $15 CALL (ADXS151218C15) current ask $1.00
option price is a current quote and not a suggested entry price.
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike