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Is Intercept The Next Biotech To Break Out?

Christian Tharp CMT

Biotech stocks have been breaking to new highs all over the market. Here are just a few:

  • Esperion Therapeutics broke to a new high last week and skyrocketed Tuesday.
  • Ampio Pharmaceuticals bolted higher last week and touched a new high Wednesday.
  • Jazz Pharmaceuticals just hit a new high Wednesday as well.

The list goes on and on. Whether it is Receptos, NewLink Genetics, Biogen Idec or the stocks listed above, biotechs are hitting new highs all the time.

The Next Big Thing?

Investors should be ready for the next breakout, and one biotech name that's getting close is Intercept.

The company: Intercept Pharmaceuticals Inc

Ticker Symbol: (NASDAQ: ICPT)

Intercept Pharmaceuticals is a development-stage biopharmaceutical company that focuses on the discovery, development and commercialization of novel therapeutics to treat chronic liver and intestinal diseases, utilizing its proprietary bile acid chemistry.

Related Link: The 4 Biggest Biotech Stocks In The Market

What Does Intercept Do?

It primarily develops a bile acid analog that completed its Phase III clinical trial for the treatment of primary biliary cirrhosis and is in its Phase III clinical trial for the treatment of nonalcoholic steatohepatitis. Additionally, it is in a Phase II clinical trial for primary sclerosing cholangitis.

Below is the one-year chart of Intercept, with added notations:

Intercept experienced a rough decline in March and April of last year. The stock then traded sideways for a several months before continuing lower during the fall.

Evidence Of Impending Breakthrough

The first sign that Intercept might finally be ready to rally was on the breakthrough of its trendline resistance. That break led to 60 percent rise all the way back to the key resistance level of $300.

The $300 resistance level has been tested multiple times; thus, a breakthrough should mean that the stock is finally ready to run back to new highs.

The stock closed Tuesday at $280.11 per share; shares rose more than 2 percent Wednesday to $285.99.

No matter the strategy or entrance point, always remember to use protective stops. Capital preservation is always key.

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