They say that timing is half the battle in trading. For biotech stocks, it's at least 75% of the war. In no other industry is it common for a stock to double in a day on news of a breakthrough or an approval. Sometimes though - if you look closely enough - you can spot a modest acceleration from a chart that hints of a big move on the horizon. Enter Delcath Systems, Inc. (NASDAQ:DCTH), Cleveland BioLabs, Inc. (NASDAQ:CBLI), and Trius Therapeutics, Inc. (NASDAQ:TSRX). All three are perking up in a most peculiar way, suggesting the buyers are waiting in the wings... with some testing the waters already.
Cleveland BioLabs shares have been make higher highs and higher lows - albeit erratically - since November, but it wasn't until today the stock likely convinced everyone that it was shrugging off a downtrend that has been in place since September. With today's move, CBLI is now (or was for a while anyway) its 200-day moving average line. We've also seen strong volume behind most of the 'up' days over the past several weeks.
The catalyst for CBLI is CBLB502, or Entolimod. The drug is actually pulling double-duty, as a radiation exposure countermeasure as well as a cancer therapy. The cancer trial is in Phase 1, and the testing of Entolimid as a treatment for radiation exposure is in what's generally regarded as the pivotal phase of a non-FDA approval path; it's near the end of its testing. The Biomedical Advanced Research and Development Authority (which is the authority that will approve CBLB502 for this particular use of the drug) has always seemed to favor Cleveland BioLabs, and the fact that BARDA invited the company to present at an upcoming symposium could mean a lot of good things.
Of the three healthcare names in focus here, Trius Therapeutics, Inc. is the one that needs the most technical help. Still, it's a worthy candidate for watchlists. The line in the sand is the 200-day moving average line at $5.35. If TSRX can make another close above that mark after it's made a string of higher lows and higher highs since early December, that should cement the uptrend into place.
TSRX is the developer of tedizolid phosphate, for the treatment of acute bacterial skin and skin structure infections. The drug's in Phase 3 trials right now. Though a new round of financing has threatened to dilute the float, Trius Therapeutics may be worthy of dealing with it. Most drugs that make it into Phase 3 trials end up getting approved, and the fact that it's an antibiotic - and not particularly dangerous to use - ups the odds of an approval.
Last but not least, while Delcath Systems, Inc. may not technically be a biotech stocks, it's still got a lot of upside that's about to be unleashed. How's that? DCTH has made a string of higher lows since November's sharp V-shaped bottom. As of today's it's cleared the effort to work past the 100-day moving average line, and is knocking on the door of resistance at $1.64. With the way volume is pouring in with today's move though, the bulls have largely tipped their hand.
DCTH makes medical equipment. Specifically, it's working on a chemosaturation system that will fight liver cancer; the system targets delivery of a drug directly to the affected areas. Delcath Systems is expecting a yay-or-nay response from the FDA for the device by June. But, given the need as well as the fact that biotech-ish names begin runups before approvals (rather than after them), this stock may be one of the best bets for the first half of 2013. That's what the chart's saying anyway.