Eight Trade Ideas and A Recap of our Latest

Vascepa’s commercial prospects are one of the hottest topics of debate in biotechnology, and this week PropThink outlined why you can trade Amarin (AMRN) in the second half regardless of your long-term stance. The stock sold off into the end of the week, as it does every month, when NCE status yet again failed to materialize in the FDA’s Orange Book. We’ll be initiating a position as the stock dips closer to its 52-week lows.

In oncology, Pharmacyclics (PCYC) and Infinity Pharma (INFI) continue to intrigue Mr. Deryugin, and he expounded why he’s buying the dips in his long-term portfolio on both — read more on Pharmacyclics and Infinity. Since PropThink began covering PCYC at the beginning of the year the stock is up 50% on ibrutinib’s potential in hematologic cancers.

Questcor (QCOR) has been a high-conviction pick for PropThink since the stock took a major dive in September of 2012. The company just bought the closest thing to competition for H.P. Acthar Gel in a deal that was driven more by “competition elimination” than by pipeline development, reason enough to suggest the stock continues higher. QCOR is up 130% since we pounded the table last year.

For an idea of what PropThink’s Premium members are privy to, here’s what we wrote to subscribers early this week regarding Seattle Genetics (SGEN):

On the chart, Seattle Genetics (SGEN) has formed an inverted cup and handle pattern, a bearish signal, and with no meaningful catalysts in the near-term, we expect SGEN to move lower into the second half of 2013. A break below 32.00 would signal the continuing down-trend.

SGEN chart

What little excitement around ASCO that SGEN generated has worn off, SGEN is printing a bearish tape, and the company continues to deliver underwhelming performance for Adcetris. In May, Seattle pushed back its estimate for the read-out of results for the Phase III Aethera trial (high risk for residual Hodgkin lymphoma following autologous stem cell transplant) based on a slower-than-expected rate of events. The company said, “reaching the pre-specified number of progression-free survival events needed to unblind the trial will likely extend into 2015.” Seattle previously expected the results in the first half of 2014.

SGEN will likely submit Adcetris data in cutaneous T-cell lymphoma (CTCL) for a compendia listing this month, with meetings in July. This would be an incremental positive, but the drug is likely already being used in this indication and the event is widely expected by investors, hence the supply of shares being sold. Aside from sBLA decisions for Adcetris by the end of this year, which we believe are priced into the stock, SGEN simply doesn’t have a lot going on until 2014/2015. This year is all about early-stage initiations and Adcetris sales.

We’re in the green on the trade, but we’re watching closely the $32.00 support line; it’s the break below that should send the stock down precipitously. The trade was in-part a reaction to the teetering market early in the week, which also prompted our interest in Exact Sciences (EXAS) as a place to get short in the event that the U.S. markets rolled over following the Nikkei’scrash. EXAS continued lower into the end of the week, and the trade has been good for 6% since we initiated the position on Thursday.


Shares of Synergy Pharmaceuticals (SGYP) got some help Friday morning as Chairman Gabriel Cerrone stepped in to buy shares on the open market at $4.42. This is the second time in the last two months that Cerrone has supported the stock around $4.50. We outlined why SGYP was a buy in April after the company raised capital, and we continue to like SGYP as a long-term holding.

Endo Health Solutions (ENDP) set a new 52-week high on Friday. The stock has continued to move higher, as Mr. King suggested last week, following the reveal of CEO Rajiv De Silva’s plan to restructure the company. You can read our earlier coverage of Endo here; the pick has been good for 50% long-term.

In connection with EXAS and SGEN, PropThink has taken a short position. In connection with PCYC, INFI, SGYP,and QCOR, PropThink has taken a long position.