Atara Biotherapeutics, Inc. - ATRA - close: 40.24 change: +2.54

Stop Loss: 36.85
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on May -- at $---.--
Listed on May 12, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 161 thousand
New Positions: Yes, see below

Company Description

Why We Like It:
Sometimes trading biotech stocks is very binary. They're either on or they're off. You win big or you lose big. Of course we try to limit any potential losses with stop losses but they don't always work as intended. ATRA looks interesting and could be poised for its next big move.

The company was spun off from biotech giant Amgen (AMGN) last year. They were initially funded by Kleiner Perkins Caufield & Byers (KPCB). ATRA is a clinical stage biotech firm. That means they don't have any significant revenues. That makes the stock extremely susceptible to any headline news (good or bad).

The company describes itself here, "Atara Biotherapeutics, Inc. is a biopharmaceutical company focused on developing innovative therapies for patients with debilitating diseases. Atara's lead programs target myostatin and activin, members of the TGF-beta family of proteins that have demonstrated the potential to have therapeutic benefit in a number of clinical indications. In September 2014, Atara Biotherapeutics entered into an exclusive option agreement with Memorial Sloan Kettering Cancer Center (MSK), under which it has the right to license (pursuant to a negotiated form of license agreement) the exclusive, worldwide rights to three clinical stage T-cell programs, including Epstein-Barr virus-targeted cytotoxic T lymphocytes, which recently received breakthrough therapy designation from the Food and Drug Administration, as well as other T-cell programs that are discovered or developed by MSK pursuant to sponsored research funded by the company."

Looking at the daily chart you can see that shares of ATRA took off in early March and rallied from about $21 to $64 in less than two months. That's was a reaction to news out on March 2nd. Here's an excerpt from the company's press release, "Atara Biotherapeutics, Inc. (ATRA) today announced that its collaborative partner, Memorial Sloan Kettering Cancer Center (MSK) has received breakthrough therapy designation from the U.S. Food and Drug Administration (FDA) for Atara's optioned cytotoxic T lymphocytes activated against Epstein-Barr Virus (EBV-CTL) in the treatment of patients with rituximab-refractory, EBV-associated lymphoproliferative disease (EBV-LPD), a type of malignancy occurring after allogeneic hematopoietic cell transplantation (HCT). Allogeneic HCT is also commonly called a bone marrow transplant."

ATRA initial public offering was the middle of October 2014. It's six-month share lock up expiration was April 14th. That probably played a part in the stock's correction lower. They company also raised capital with a secondary offering back in February. Hopefully that means they won't do another secondary for a while.

Without any earnings to speak of it's tough to build a real fundamental story on ATRA. This looks more like a technical trade. The correction from its April high just stopped at the 61.8% Fibonacci retracement level. Now it's starting to bounce. We are suggesting small bullish positions if ATRA trades at $40.50. More conservative traders may want to wait for a rally past its simple 50-dma instead (currently near $41.00). I am labeling this a more aggressive, higher-risk trade. The stock is volatile and doesn't see a lot of volume. Plus the stock could see extreme moves on any positive or negative headlines.

Trigger @ $40.50 (small positions to limit risk)

- Suggested Positions -

Buy ATRA stock @ $40.50

Daily Chart: