Way back on September 25th, before the market opened, I penned some less than optimistic comments on Savient Pharmaceuticals, Inc. (NASDAQ:SVNT), which is to say I expected the stock to start falling back after the 360% runup it had managed to make in less than two months.
It was not a well-received premise. Translation: Readers (and presumably traders who had piled into a SVNT position during the rally) thought I was in idiot for stepping out of a stock just when the gettin' was starting to get good. With the euphoria flames being fanned to full capacity by that point in time, the only thing Savient Pharmaceuticals shares could possibly do from there is go higher.
Well, I hate to be the one to say I told you so, but, I told you so.
As it turns out, SVNT ended up hitting its ultimate high on the 24th; the 25th when I suggested it was doomed was the beginning of its demise. It opened at $2.85 that day, and by mid-November Savient shares were trading at $1.13. By May of this year, it was trading at less than $0.60.
I don't say any of this to pat myself on the back. I bring it up just to make the point that I'm not biased in favor of SVNT. I'm just a guy trying to help traders make some money by spotting likely tops and bottoms. Making that point up-front (hopefully) makes my now-bullish-again call on Savient Pharmaceuticals more credible.
Here's the deal... SVNT popped back above several of its key moving average lines a week and a half ago. Better still - and this is what makes it convincing - the stock's managed to stay there, and even start to use those key moving average lines as floors. The volume behind this strength has perked up too, even if erratically.
The prod for the jump is a rumored price hike for its flagship drug, gout-treatment Krystexxa. What kind of price hike could spur a move from the stock, from $0.58 to the current $0.83? Well, a price increase that was far bigger than expected. The market was pretty much counting on the 30% increase in the drug's price late last year as being the last price increase for a while, but Savient upped it again this month, by another 40%. While outrageous, odds are most patients and/or insurers will be compelled to pay it... at least for a while.
Eventually, the market will either experience too much cost fatigue, or competitors will see the kind of revenue being driven, and introduce a comparable drug of their own; maybe it will be a combination of both. In the meantime though, the market's turning the heat up on SVNT again, and that's going to make for a trade-worthy trend. Just don't linger too long. This one could end like September's did... abruptly, and unannounced.
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