Editor's Note

Stocks in the biotech sector have some ugly charts. There is a slow motion train wreck in progress. Some are declining because the sector is declining. Others are declining because their drugs are not passing the clinical trials or they may be a target of new price regulations in 2017.


NEW BULLISH Plays


No New Bullish Plays



NEW BEARISH Plays


DEPO - Depomed - Company Profile

Depomed is a specialty pharmaceutical company engaged in the development, sale and licensing of products for pain and other central nervous system conditions in the USA.

The company reported adjusted earnings of 16 cents that missed estimates of 35 by a mile. Revenue of $111.2 million also missed estimates for $114 million. For the full year the company reported a loss of $1.26 per share or $75.7 million.

In late February the company reported the results of a 635 patient trial of pain drug GRT6005. While pain was reduced there were low levels of severe adverse events that were more frequent on higher doses of the drug. Shares declined on the news.

Shares have been trending lower since the 29th. There was a moderate short squeeze on the 11th that corresponded with a short squeeze in the entire biotech sector. Shares immediately rolled over and moved to new lows as soon as the sector index rolled over.

News flow has been very sparse on Depomed in March and shares are accelerating to the downside.

Earnings are May 10th.

Sell short DEPO shares, currently $12.99, initial stop loss $14.25

No option recommendation because of wide spreads.