Wrap-Up (At the Close): As much as today kind of sucked there is one extraordinarily bright piece of the chart to show for all of this: a successful re-test of $13.00 (adjusted close of $13.05) on strength. Now, there is no telling at this moment what tomorrow's trading will look like, but I can say that if we are going to continue to move upward with some authority, we should enter into a period of low volume with neutral money flow fairly soon. The reaction to this morning's earnings was extraordinarily one-sided, so we could be rather "bouncy" for the next couple of days but the classic "Distribution - Consolidation - Accumulation" pattern that has been our friend for the past several months should take hold.
Our support at $12.46 is intact, the resistance at $13.26 is back in play and honestly today could have been much, much worse. We've been pretty volatile for the past week or so and that is like shaking a beer can - it creates froth. Now we can see what the real deal is.
Well, I have a long-standing history here of playing "Bop-The-Rats" when somebody starts dumping trash in my wheelhouse and I wouldn't look for that to stop any time soon. I'm going to provide a daily "Wrap-Up" as an update to my earlier post once the dust settles - the volumes today have (or had) everything pretty much askew.....
The level to watch for a breakdown is $12.09, not $12.26. $12.46 is support; $12.26 is nothing. The 50 Day Moving Average won't be of very much significance unless and until the 10 Day MA crosses under it, which it is quite a way from doing (10 DMA = $13.08, 50 DMA = $10.37). I don't know what metric you are using for calculating the Bollingers (I suspect it's the Yahoo Technical Analysis Charts which are something South of useless - they don't weight for volume very well) but if you care to look at the channel we are ACTUALLY in you will see that the upward trend is intact.
So, yes, there is a breakdown level to watch at $12.09 - and it will have a multi-day decline in the 10 DMA as a leading indicator (which we are not seeing at the moment). Given the extent of distribution that we have seen today, and the fact that we have yet to see a successful complete consolidation at $13.00 it is far too early to confirm the immediate direction that the stock should take - it could well stall in the $12.00 range before it makes another strong move, although my money is on consolidation in the $13.00 range.
If the stock price were going to break down, it had a perfect excuse to do so today. Instead, we've had the froth blown away with the mo-mo players.
Concur. I stayed out of the whole "Buying POZN" discussion for three reasons. The first was that growth by acquisition is a very costly strategy, better suited to a company with a much larger market cap and MUCH deeper pockets. The second was that most of POZN's pipeline isn't really in our wheelhouse. Finally, being a "developer" just introduces a level of risk and expense that could under-cut the gains we've seen in the past year in about a nanosecond. "Development" is a Cost Center; "Sales" is a Profit Center.
Okay, now that the froth has been well and truly blown off of our pint it might be a good time to look at some basics. This past week or so has been so loaded with "maybe" and "what if" that a return to the fundamentals of the business case seems in order.
We have three products now, two of which (Duexis and Vimovo) are in what would classically be considered as the most robust growth stage of their life cycle, with Vimovo (which already had some market penetration) having the advantage of an aggressive re-launch. Our third product, Rayos, while it is most definitely showing positive signs hasn't gotten there yet, but sometime in the next quarter or so it should start to hit that "sweet spot" as well.
Based on some fairly conservative number-crunching I think that non-GAAP profitability will be achieved in the Second Quarter, probably early, possibly in time for the Mat (Q1) Earnings CC. If it is then I would think that guidance will be updated during that Conference Call, unless sand-bagging remains the order of the day.
I think that acquiring POZN is off the table, at least in the near-term, and I (and I realize I might be alone in this) for one think that's a GOOD thing. Yes I understand the whole "buying the cow" argument, but don't forget if you buy the cow you must also build a barn and arrange to keep the silly critter fed. And figure out how to breed better cows. Sometimes the smart move is simply to go buy the milk.
On the other hand there are clearly plans to license additional products this year so growth should continue on an aggressive scale. Profitability in the early part of the year means a working cash reserve and that means leverage in any planned licensing deal. Tim's words were along the lines of there being boxcar loads of under-promoted drugs out there, and I have to say I got all tingly at the thought...
So that's it. No levels, no trend analysis, just a look down the road. Personally, I think it looks pretty good.
That's quickly followed by the First Commandment of IR: "Runneth NOT Thy Mouth Lest Thou Frighten the Uninformed and TICK OFF the Powerful."
Not a problem. Most of the information anyone needs about this situation is readily available, either on the FDA website of in the US Code of Federal Regulations. Nobody ever said that the regulatory process wasn't a labyrinthine mess - but the one consistent rule that most successful bio companies follow is "Step Thou Cautiously and at ALL COSTS Tread NOT on the Toes of the FDA."
Well, a "breakdown" would be signaled by a transition on volume below $12.09 so what we are seeing is simply extreme volatility. The biggest problem I have this morning is the huge "swing" ($12.80 - $14.50) of a targeted consolidation level. If I were assigning probabilities I would say that the highest was a consolidation around $13.00, then $13.50 with a very low probability of $14.00. Basically we need to work through today's volatility to find a level.
We didn't "fill the gap" by the end of the first hour of trading (although when I posted it was looking like we might) but I'm seeing some fairly aggressive selling hitting when we start to trend toward $13.20 (plus or minus a bit) and once those sellers are exhausted things should stabilize.
Volume right now is over 1.5M and if I'm right about the dynamic that should start to taper off pretty soon. We'll see. We've been trying to consolidate above $13.00 for a week so I'm looking at a successful re-test there as crucial.
You guys didn't think I'd leave you in the lurch, did you?
Okay, first to state the painfully obvious: expect a lot of volatility in the stock price this morning. We had a big gap down as the last of the short-term players bailed, but we are doing a pretty good job of filling that gap. If we get into the old $13.40 to $13.60 range in the next half hour or so we are in a really good position for showing green by mid-day or so. Keep an eye on $13.50, as that was a very "sticky" area for us yesterday.
Right now we are showing very high volumes (duh) but more importantly our money flow is Bullish and if that continues on (hopefully) lower volume it will signal consolidation with strong accumulation raising the consolidation target above the earlier $12.80-$13.20 band and into the mid-$13.00 range.
The breakout threshold is $13.90 (although what is more likely is a range from $13.70 to $14.10) but I wouldn't look to break into that today - too much "churn". There are no breakdown signals on the chart at this time.
Over the longer term: (more than 1 week) We should expect the stock price to trade in a range as the long-deferred consolidation takes place. Right now I have that charted in the $14.00 range but that's likely skewed a bit by the volatility of the past week or so. The level could actually fall anywhere between $13.20 and $14.50, which I know is a HUGE range but is the best outlook I can derive as of this morning.
The upward channel is still intact, but look to complete consolidation before the next big move.
Not really. Now, the early surge Tuesday showed some "froth" but that shook out pretty quickly. In retrospect, all that drama probably did us a favor today as it cleaned out some of the short-term money. Too much volatility by half to suit me this past week and I don't see a significant drop in our immediate future - but a nice solid consolidation would be a thing of beauty.
Watching the pre-Market we are closing the gap a bit. I expect that we'll gap down some first thing, but I also think that the shakeout of the day before yesterday is going to serve to lessen the impact some. Given the strong buying pressure through the day yesterday I'll be watching to see if that continues into today - and I think it very well may.
As to the short position - there's simply no telling how that is going to play out. They haven't had a fundamental thesis for months; they're just playing the "what goes up must come down" game at this point.
Momentum is a fickle b****, bender. We are going to shuffle the day-traders and momentum players out of the deck and get back to sustainable increases. Today is likely to be quite the ride.
Also it looks like the immediate focus is going to be on new product licensing rather than acquisition of another company which makes a lot of sense.
No, galaberge (though thank you for the nice thoughts), I'm not leaving the Board, I'm just not going to be re-running charts two or three times a day and posting the results here. I was only doing that to help keep people informed in the last week of the run-up to Earnings and thankfully that's done. It was actually a bit more of a chore than I thought it would be - Daily and shorter duration charting is not what I generally do.
@rifkah60: The IRBs are not supervised by nor are they in any other way under the guidance or control of company management. They are Independent Audits of the candidate site, conducted by a qualified Review Board empaneled of the site itself and submitted to the FDA.
Now, the company would have to be a cross-section of full-blown idiots to have forwarded the Amended Trial Design to a candidate site that was less than fully qualified to conduct the procedure, and the IRB is primarily an administrative review not a technical one, but they still take their own sweet time to complete. According to the FDA usually an IRB runs some 12 to 16 weeks. They can take less time or appreciably more depending on the circumstances.
The amount of time varies - in most cases it's two to four business days. And I have previously posted this information as well as guidance on where to look up the rules of the game either in the FDA's Standards and Practices or the US Code of Federal Regulations.
The FDA will let the company know when and if they make a satisfactory determination concerning the completion of the IRBs or when they determine that the IRB results do not meet FDA standards. Whether they make notification concerning each IRB or all IRBs is completely at the discretion of the FDA, and any subsequent dialog will be conducted between the company and the FDA.
The company is obligated to communicate to shareholders only when the FDA makes a determination. The FDA discourages direct communication between candidate sites and the company during the conduct of the IRB. That being the case, the company would have no basis from which to communicate interim information to shareholders - and would likely be in violation of FDA standards if they did.
The process is very direct: the site conducts an IRB to determine whether or not they have the ability to conduct the Study in accordance with FDA guidelines. The review results are communicated to the FDA for confirmation. The FDA then communicates those findings to the sponsor company at which time a Material Definitive Agreement is executed between the sponsor company and the sites.
There is no point in that process that the company could actually and accurately make a "good faith" estimate of progress. They would just be making stuff up. And they are required to report the execution of Material Definitive Agreements under Regulation FD.
In dealing with the FDA there might just be a more idiotic way to shoot yourself in the foot than by violating their communication standards concerning a confidential process - but if there is, I'm not real sure what that would be.