In perfect world, biopharma stocks would (at least approximately) reflect the progress and value of that company's underlying drug(s). We don't live or trade in a perfect world though. Indeed, for small cap biopharma names like Peregrine Pharmaceuticals (NASDAQ:PPHM), trading is more like a poker match - you have to be able to gauge how far the other players/traders are willing to go with their hand. If you look closely at a chart, however, you can gain an edge on most of the other players in the game. PPHM has just dropped such a hint.
If the name and ticker ring a bell, PPHM is the company developing bavatuximab - a monoclonal antibody that can be used to weaken cancerous cells and tumors. It's being tested as a therapy for NSCLC (non-small cell lung cancer), pancreatic cancer, liver cancer, and breast cancer, but it's the NSCLC trials that are of the most interest right now. That may be because that's the trial that's furthest along of all the trials Peregrine Pharmaceuticals has underway. It's at the end of Phase 2, awaiting the green light to proceed to Phase 3.
The results of the bavatuximab trials have been..... the word 'confusing' may best describe it. After Phase 2 trials were all but completed, it was discovered - by Peregrine - that some of the doses weren't always the right size for some of the patients. Normally that would require a complete re-do of the whole trial, but as it turns out, PPHM was able to salvage some of the data from the testing - enough to proceed without a do-over, in the company's opinion. Whether or not the FDA also agrees that Phase 2 doesn't need be done again remains to be seen. That's the tug of war going on with the stock right now, which will end one way or another when the company meets with the FDA in Q2 to talk about going into Phase 3.
Fast-forward to today, and to today's chart of PPHM in particular. It looks like the bulls are more convinced that bavatuximab can proceed to Phase 3 NSCLC trials than the bears are convinced that it won't.
The big clue to that end is how Peregrine Pharmaceuticals shares have once again pushed up and off a key rising support line (red). That's the second higher low since the mid-2012 move to a new multi-year low of $0.39. This longer-term weekly chart puts things into a bigger perspective. The bulls ARE forging ahead again, despite what are a lot of question marks surrounding the company. That conviction may ultimately be errant, but until it's proven wrong, that conviction is apt to make for a very bullish trade.
Some fans and followers of PPHM will see enough bullishness in the current chart to go ahead and take the plunge, while others may want to wait and see shares move above the 50-day moving average line (purple) to confirm the new uptrend is well underway. Either way, the odds and upside look favorable.
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