Monday, April 21, 2014

Using Fibonacci Retracement

Fibonacci retracement is a very popular tool with technical traders and is based on key numbers identified by mathematician Leonard Fibonacci in the thirteenth century.  Fibonacci retracement is created by taking two extreme points on a stock chart and dividing the vertical distance by the ratios of 23.6%, 38.2%, 50%, 61.8%, and 100%.  The fibonacci number is a sequence as follows, 0,1,1, 2, 3, 5, 8, 13, 21, 34, 55, 89, and 144 etc.  Each number is simply the value of the two preceding numbers added together which continues infinitely.  As an example we will use one of our holdings ACAD below.
From the above chart, Acadia Pharmaceutical has retracement levels just above the current price.  I am targeting the 50% level or $23.78 as a normal retrace from recent high to current low made last week.

Bottom Line:  In addition to using fundamental analysis, it never hurts to incorporate technical tools for potential buy / sell points based on those fibonacci levels to reduce risk.  Thank you for reading.

Disclosure:  We hold shares of ACAD.

Friday, April 11, 2014

Assessing the Recent Selloff

We're in the middle of a market pullback or correction.  The S&P is now down -4.3% from the high just last week.  A technical picture of where we stand today is below with comments.
Since 2013 the 140 day exponential moving (purple line) average has been good support for the S&P 500 index ETF SPY.  Also note that the RSI has hit the 30 reading or close on the prior pullbacks we have experienced.  To summarize this chart.  We are getting close to a moving average trend line and a 30 low reading on the RSI (relative strength index).  Both these areas have provided market pullback support in the past.
During the most recent pullback in February, we had hit the fibonacci 50% retracement level before reversing higher, and this current pullback (chart above) that we are experiencing is sitting right on the 50% retrace level, which is a typical retrace for an index prior to reversing higher.
The above chart illustrates what has currently occurred since we hit an all time high of 189.70 just recently. We have pulled back -4.3%.  I am targeting a -6% pullback which would run very similar to prior sell offs and put the index at support areas, from the first chart above.

Bottom Line:  Most of my technical indicators are signaling that we are getting close to at least a short term bottom on this current sell off.  We are close to the first chart above's support line (140 exponential moving average), we hit the 50% retrace on the middle fibonacci chart, and we are currently in the range of prior pullbacks experienced over the past year (third chart) of -4% to -7% range.  There has been no technical damage done to the intermediate to longer term time frame chart perspective for the S&P 500 from where we currently stand today.  Thank you for reading.  

Contact Information:  portfoliomgt1@gmail.com    586-431-8000

Saturday, March 29, 2014

Investor Complacency

The greatest danger to investors is complacency.  It is usually when investors are most complacent that they are blind sided when a real market correction takes hold and their portfolios take a hit.  I am using the word complacent because that is exactly the sentiment that the majority feel about the markets at this time as only 17.5% have a bearish bias according to Investor Intelligence Survey Percent Bears.
Since 2012, the largest correction the markets have experienced has been a -10.4% move lower in the S&P 500, and the largest pullback since 2013 has only been -7.3%.  Each pullback has the Federal Reserve assuring investors that more Quantitative Easing (QE) tools are available at their disposal.  The chart below shows the market pullbacks since 2012 and the amount of QE that was being issued during that time.
Notice that in 2012 when we were running single QE of $45 billion per month the corrections were -10.4% and -9.1%.  In 2013 when the fed increased the stimulus package and was running double QE, or $85 billion per month compared to $45 billion per month in 2012, the pullbacks only averaged around -5%.  Is there a correlation between the extent a market pulls back and the amount of QE that is being issued at that time?  Or is it just a matter of investors feeling assured that the Federal Reserve has their backs, and that buying the market dips regardless was the plan.
So, fast forward to the present.  The QE has been tapered down from the peak of $85 billion per month in December of 2013, to currently $55 billion starting in April.  Essentially it's QE in reverse.  Below is a chart showing just how far down a market correction of say, -15% to -20% could take the market to.
The chart above only shows the maximum correction of up to -20% that I chose to display, which historically is a healthy market correction, but we potentially could expect something more severe than that, or even a bear market, which is more than -20%.  With readings so complacent, (per the Investors Intelligence Survey Bears of only 17.5% being bearish) are investor portfolios positioned for the possibility of a market correction of up to -20%? Tough question to answer.   

Monday, March 3, 2014

ACAD: Acadia Pharmaceuticals ($28.19)

After the close, Acadia Pharmaceuticals announced the planned secondary raising of $150 million by selling 5.3 million shares. The timing is excellent, as the stock is just off it's all time high and dilution will be minimal.

3-6-14:  The offering was oversubscribed so the end result is that the company is selling 6.4 million shares at $28.50 instead of the original 5.3 million share capital raise.  The underwriters also have the right to acquire .96 million shares in the next 30 days.  Baker Brothers Advisers bought $15 million worth of shares or 526 thousand shares, 8% of the offering.

Bottom Line:  Good move by management to raise cash while the stock is near all time highs.  The company should exit 2014 with a minimum of $290 million in cash for commercialization and future trials.  Thank you for reading. We currently hold shares of ACAD.

Friday, February 28, 2014

ACAD: Acadia Pharmaceuticals ($28.30)

Acadia held their 4th quarter conference call on Thursday after hours.  A brief of what I found interesting is below.
  • The company keyed on the potential for Pimavanserin to be used for schizophrenia patients (in addition to Parkinson's and Alzheimer's patients), both as an add to with a low dose of Resperidone, and as a single therapy for a younger demographic patient.  The company expects to share new information regarding a schizophrenia trial later in 2014.
  • The side effects induced by the atypical agents for schizophrenic patients may include weight gain, non-insulin dependent (type II) diabetes, cardiovascular side effects, sleep disturbances, and motor disturbances. The company believes that these side effects generally arise either from non-essential receptor interactions or from excessive dopamine blockade.
  • In the released 10-K, it states "Parkinson's disease psychosis is a debilitating disease that occurs up to 60% of patients with Parkinson's disease."   
  • The company believes that psychosis from Alzheimer's disease occurs in approximately 25%-50% of patients.
  • The company has hired 14 new employees for the commercial launch of Pimavanserin, which I believe could occur in the first quarter of 2015.
  • The company is pleased with all the pre-filing testing requirements that has occurred to date, and plans on meeting with the FDA for pre-NDA direction in the spring.
Bottom Line:  The highlight of ACAD's fourth quarter conference call pertains to the positive comments regarding Pimavanserin for schizophrenia patients and the two potential paths for trials they can focus on for this indication in the future. Also, the company is pleased with all required NDA filing testing to date, and will meet with the FDA in the spring. It was a solid conference call from Acadia's management again.  Thanks for reading.

Saturday, February 22, 2014

ACAD: Acadia Pharmaceuticals ($28.84)

ACAD announced that their 4th quarter conference call will be held on Thursday February 27th at 4:00 p.m. The stock had a strong week gaining +20.52% and has moved up to prior resistance at the $29.00 area on heavy volume.
Bottom Line:  Looking forward to ACAD's 4th quarter conference call on Thursday, and will be listening for any new information regarding timelines related to the FDA process, and any update on the ongoing Alzheimer's phase 2 trial.  We are long term investors of ACAD.

IDRA: Idera Pharmaceuticals ($6.00)

IDRA will be presenting at the RBC Capital Markets' Global Healthcare Conference on Tuesday the 25th at 8:00 a.m.  IDRA stock had a solid week gaining +36%, and has broke above prior resistance on above average volume.
Bottom Line:  IDRA has almost doubled from the point we purchased the stock in the low three area.  The company plans to disclose their phase 2 psoriasis trial results by the end of the first quarter which could be a stock moving event.  We continue to hold shares of IDRA.  

Saturday, February 1, 2014

IDRA: Idera Pharmaceuticals ($4.64)

Idera Pharmaceuticals became a new holding in December when we started buying the stock here IDRA: $3.04, and traded in /out, then back in using volatility to our advantage to buy shares back. Since then, the stock has advanced nicely to $4.64 with the addition of new key employees.  The special thing about the new personnel is that they have prior ties while serving at Genzyme, an extremely successful company that was purchased by Sanofi for $20 billion dollars.  On January 9th, 2014, two new key people were hired by IDRA.  Lou Brenner MD, has joined as senior vice president and chief medical officer, and has experience with advancing clinical trials with previous companies.  Also, Dr. Mark Goldberg has been appointed as a new board member. Previously, while at Genzyme he played a key role in the development of four successful orphan therapies. Dr. Goldberg is a board-certified medical oncologist and hematologist and has published more than 50 papers.  So the list of employees that are currently at IDRA with prior experience working together at some point at Genzyme consist of the following:

CFO: Louise Arcudi
Chairman of Board:  James Geraghty
Board Member:  Mark Goldberg
Chief Medical Officer:  Lou Brenner

Near Term Catalyst:
  • 16th annual BIO CEO & Investor Conference 2-10-14.
  • Phase 2 top line results IMO-8400 plaque psoriasis, first quarter.
  • Phase 2 top line results IMO-8400 plaque psoriasis dose escalation .60 mg. second quarter.

Bottom Line:  Idera Pharmaceuticals is making progress behind the scenes with the addition of key personnel that have prior experience growing an emerging biotechnology company while at Genzyme.  Near term catalyst could move the stock higher in the coming weeks.  Thank you for reading.

Disclosure:  We hold ACAD and IDRA.

Saturday, January 25, 2014

Perspective On The Recent Selloff

The current correction is -3.14% from the all time highs.  So, is this the beginning of a bear market or just the typical (-4% to -7%) pullback that we have seen a few times throughout 2013 that has led to new highs shortly after?
Above is a weekly chart which shows all the pullbacks in 2013 and the support that the 25 EMA (exponential moving average) has provided.  So, at the very least, I am expecting the market to fall to this area before reversing back higher.  A clean break and close lower of this indicator, then I think we are looking at a correction of up to -10% potentially.  

Bottom Line:  Next week will be a very important week for market direction. We have a two day FOMC meeting mid week to see if there will be further liquidity taper, as well as more earnings reports to ponder. Thank you for reading.

Disclosure:  We currently hold ACAD & IDRA.

Saturday, January 4, 2014

2013 Portfolio Returns

Portfolios managed by Shaw Investments had the following returns before fees in 2013.

*The average portfolio returned +34% in 2013.
The highest portfolio return was +68% in 2013.
The lowest portfolio return was +8% in 2013.
The average monthly return was +2.83%.
The highest performing month was +17%.
The lowest performing month was -13%.
There were nine out of twelve positive months 75%.
Monthly standard deviation was 8.50%.
Monthly correlation to the S&P 500 was -.191.

*Past performance is not necessarily indicative of future results.

Shaw Investments LLC, is an investment advisory firm that invests primarily in early to mid-stage Life Science companies with a three to five year holding period.  Thank you for reading.

Contact Information:  portfoliomgt1@gmail.com or 586-431-8000

Tuesday, December 17, 2013

IDRA: Idera Pharmaceuticals ($3.04)

Idera Pharmaceuticals is a new holding.  Idera is a clinical stage biotechnology company developing a novel approach to the treatment of autoimmune diseases and certain genetically defined forms of B-cell lymphoma.  Their technology platform is based on nucleic acid therapies to inhibit over-reaction of Toll-like receptors.

Quick Facts:
135 million shares outstanding including warrants
84 million in cash
5M / Q burn rate
810 Million Market Cap
2031 for IMO-8400, 2034 IMO-9200 Patent Expiration

Clinical Trials:
Phase 2 Moderate to Severe Plaque Psoriasis.
Phase 1/2 B-Cell Lymphoma with MYD 88 L265P.

Catalyst:
Phase 2 for Psoriasis top line results in January.
Complete enrollment Phase 1/2 B-Cell Lymphoma?

Bottom Line:  Idera is unique with their technology based around Toll like receptors.  The company is currently working on the dosing for their IMO-8400 and MO-9200 technologies.  They have cash for now that should last until third quarter of 2015, and also patent protection until 2031 and 2034.

Friday, December 13, 2013

ACAD: Acadia Pharmaceuticals ($23.03)

Two companies that we currently hold shares in, Acadia Pharmaceuticals and Omeros, both presented at the 24th annual Oppenheimer Healthcare Conference in New York this week.  From their presentations, I wanted to add any new relevant information for future reference.

ACAD
CEO Uli Hacksell presented on Tuesday.  Some new takeaway's from his presentation are below.
A)  He mentioned that the patent for Pimavanserin expires in 2028, but also mentioned the potential for filing a patent extension after that time period was a possibility.
B)  The other significant new information had to do with side effects and the box labeling for PDP.  He mentioned that under very high dosing (up to 300 mg) nausea was noticed.  Pima will only be prescribed at 40 mg for PDP.  No other side effects were mentioned as he said this is a very unique safe molecule.
C)  All timelines remained the same as far as filing the new drug application for PDP (by end of 2104) and phase 2 ADP data potentially taking up to two years for data.
D)  CEO expects at the very minimum equal pricing to other current atypical anti-psychotic drugs.
Another positive conference for ACAD. The CEO keeps hammering home the safety and efficacy of Pima compared to other Atypical anti-psychotics currently being used, and the potential for premium pricing for the unmet need of PDP and ADP.

OMER
Omeros CEO Greg Demopulos presented on Wednesday, some key information below.
A)  There was much mention regarding partnering for some of their indications, but no concrete details.
B)  The phase 2 Schizo data which was previously thought to be made public in December, now has been pushed back to January.
C)  They have been pursuing hard, getting medical reimbursement for OMS302 or Omidria, which is expected to be approved mid 2014 and launched there after.
D)  Nothing mentioned regarding their cash position.
The phase 2 announcement of OMS824 top line results in January, and the medical reimbursement for Omidria which is expected to launch after approval in mid 2014 are two important events.
Thank you for reading.

Sunday, December 1, 2013

TRGT: Targacept ($5.75)

(TRGT) Targacept has developed what they trademark as NNR Therapeutics or neuronal nicotinic receptors. The company is dedicated to the discovery and early development of compounds that interact with nicotine receptors in the human nervous system to treat such diseases as Alzheimer's Disease, Parkinson's Disease, Tourette's Syndrome, schizophrenia and others.

Therapeutic Applications of Nicotine
Nicotine's beneficial effects on learning, memory and other physiological and behavioral endpoints have been well documented in scientific literature.  Some studies reported that smokers had a lower incidence rate of Alzheimer's and Parkinson's Disease.  It was also thought that nicotine could have a beneficial effect on schizophrenia.

Dvelopment of Novel Nicotinic Therapeutics
Companies like Targacept and EnVivo (private company), have worked to discover and develop nicotine-like therapeutic compounds that could be suitable for humans without the side effects of increase in heart rate, blood pressure and nausea.

Current Trials
Targacept  Alzheimer's Phase 2 Trial
- Ongoing with top line results mid 2014.
Targacept  Schizophrenia Phase 2 Trial
- Ongoing with top line results Dec. 13 or Jan. 2014.
EnVivo Alzheimer's Phase 3 Trial
- Still recruiting

The primary outcome measure in the Alzheimer trials above is the change from baseline in the Alzheimer's Disease Assessment Scale-Cognitive Subscale 13-item, or (ADAS-Cog-13).  ADAS-Cog-13 helps evaluate cognition and differentiates between normal cognitive functioning and impaired cognitive functioning.

Note that neither company or trial above is seeking a cure for Alzheimer's or Schizophrenia, but trying to improve cognition and dementia with their treatment for a given period of time, above the current standard of care.

Disclosure:  We currently do not hold shares in TRGT.

Saturday, November 16, 2013

MRTX: Mirata Therapeutics ($17.37)

Mirata Therapeutics (MRTX), is a microcap oncology company with their lead inhibitor mocetinostat (MGCD0103), an oral spectrum-selective HDAC inhibitor for the treatment of myelodysplastic syndrome or lymphoma.  The company has two other inhibitor products in early stages of testing but mocetinostat is the focus of this post because it is furthest along in the FDA approval process, with the initiation of a phase 3 trial scheduled for the second half of 2014.  The company believes they could be the first HDAC inhibtor to the market for first line myelodyspaltic patients, a disease that affects 10,000 to 30,000 people in the US and that may have a global MDS market of 1.5 billion by 2017, based on research here Global MDS Market.
Quick facts:
13 million shares outstanding
220 million market cap
68 million in cash
Patent Exp: 2022 for (mocetinostat)
13 clinical trials and 437 patients have used (MGCD0103)
Competition:  MEI Pharma (pracinostat) Patent Exp. 2028 for composition of matter.
Phase II Results  (Presented at ASCO June 2013 Abstract 7116)
The subset analysis involved 28 MDS patients.
54% had bone marrow blast count >10%.
64% categorized as intermediate or high risk.
Median age was 72.
Pre-treated with one or more prior therapy:  (50%) of patients.
Objective Response Rate:
(CR + CRi + Hl) 61%.
Disease Control Rate:  
(CR + CRi + Hl + SD) 93%.
Grade 3 drug related adverse events:
Fatigue (23%), Nausea (22%), Diahrea (17%), and vomiting (9%).
The results above compare favorably to current standard of care and is leading to a phase 3 trial for MGDC0103 in first line MDS patients second half of 2014.

Bottom Line:  The company plans to finalize discussions and obtain a special protocol assessment from the FDA for the design of a phase 3 trial for mocetinostat in patients with mylodysplastic syndrome in the first half of 2014.  There is competition from other companies that use HDAC therapy for myelodysplatic syndrom (MDS), but Mirati's data looks better than the current standard of care. The company is about a year ahead of Mei Pharma's trials where the data looks equal in efficacy so far.  The company can be first to market with an oral HDAC inhibitor in combination with AZA for patients in first line MDS.

Disclosure:  We currently do not hold shares of MRTX.

Thursday, November 14, 2013

ACAD: Acadia Pharmaceuticals ($22.94)

Just released today, Acadia Pharmaceuticals has started a Phase 2 trial for ADP (Alzheimer's Disease Psychosis).  The press release with the fine details is below.  This trial will be conducted in London England.
The Phase II feasibility trial, referred to as the -019 Study, is a randomized, double-blind, placebo-controlled study designed to examine the efficacy and safety of pimavanserin in about 200 patients with ADP. The study is being conducted through a large network of research care homes established as part of the National Institute for Health Research (NIHR) Maudsley Biomedical Research Unit. Following a screening period that includes brief psycho-social therapy, patients will be randomized on a one-to-one basis to receive either 40 mg of pimavanserin or placebo once-daily for 12 weeks. The -019 Study will assess several key efficacy endpoints, including use of the Neuropsychiatric Inventory - Nursing Home (NPI-NH) scale to measure psychosis (hallucinations and delusions), agitation/aggression, and sleep/nighttime behavior, as well as use of the Cohen-Mansfield Agitation Inventory - Short Form (CMAI-SF) scale and the Alzheimer’s Disease Cooperative Study - Clinical Global Impression of Change (ADCS-CGIC) scale. Key efficacy endpoints will be based on the change at week six from baseline. The study will also assess additional exploratory endpoints, including the cognitive status of patients using the Mini-Mental State Examination (MMSE) scale, and the durability of response to pimavanserin through twelve weeks of therapy.
About Alzheimer’s Disease Psychosis
According to the Alzheimer’s Association, 5.4 million people in the United States are living with Alzheimer’s disease. While the criteria for diagnosing Alzheimer’s disease are mostly focused on cognitive deficits, it is often the psychiatric and related behavioral symptoms that are most troublesome for caregivers and lead to poor quality of life for patients. An estimated 25 to 50 percent of Alzheimer’s patients may develop Alzheimer’s disease psychosis (ADP), which is commonly characterized by disturbing visual hallucinations and delusions. The diagnosis of ADP is associated with more rapid cognitive and functional decline and institutionalization. There currently is no therapy approved for the treatment of ADP in the United States.
Study Collaboration   “We are delighted to pursue this clinical study in collaboration with Professor Ballard and King’s College London,” said Roger G. Mills, M.D., ACADIA’s Executive Vice President of Development and Chief Medical Officer. “We believe that their unique clinical research infrastructure and expertise will provide access to a pool of well-characterized ADP patients and enable the use of a small and geographically-focused group of highly trained raters, which we expect to enhance study precision.”
Bottom Line:  ACAD has given this phase 2 trial for ADP every chance of success by working with Clive Ballard and the King's College London.  The study will be a small geographically focused group of highly trained raters which should enhance the study precision.  Thank you for reading.
Disclosure:  We currently hold ACAD, and OMER