As Covid-19 Surges, Biotechs Look to Run

Daily cases of Covid-19 have hit all time highs in the United States and it is clear that if your money is going to be in the market, it would be a great benefit to yourself and the progress towards a vaccine, to show the biotech sector some attention this week. As traders know, a hot sector is ideal for trade opportunities and can come and go in a matter of weeks, maybe days. As we look forward to the development of a vaccine, I have my eyes on a few stocks in this industry that are making moves this month.

We will be touching upon some fundamentals, but do keep in mind that my analysis for these tickers is mostly technical and generally I am looking at short term opportunities on some low cap plays, especially those that are looking for some cheap stocks to trade , if you’re trying to grow a small account.

CMRX 

Chimerix is a development-stage biopharmaceutical company, focused on developing various medicines that help patients living with cancer and other serious diseases. The details of what specific diseases they have been focused on recently is irrelevant when a stock is trading so close to its 52-week high in a sector that has had a positive week. What is also interesting about CMRX is they had a press release about their cash burn. Cash burn is the amount of cash a company is spending every year to fund their growth. This draws attention to the length of their cash runway (the amount of time it would take them to burn through their cash at the current cash burn rate). According to yahoo finance, they have a projected runway of 18 months as of march 2020, yet operating revenue for Chimerix has increased 30% in the last year showing that their growth has not been halted. As we go into the week, expect nothing to change in their cash burn rate and their push for growth is likely to continue. Look for CMRX to potentially break its highs, as a breakout could cause their stock to trade .50 to 1.00+ higher than its breakout mark.

VRNA

Any company that receives a financing of double their market cap, deserves a spike in its share price and that’s exactly what happened to Verona Pharma Friday morning during pre-market. If you were blessed enough to have gotten in shortly after the press release, you could have made almost 4x your investment in a few hours. But for those that missed out, another opportunity to profit is possible if we see the right price action during pre-market on Monday. Though VRNA saw a fade in price into the afternoon as the hype probably settled down, look for risk taking that were late to the party to try to catch this falling knife and push VRNA’s share price higher. I like the amount of volume VRNA has traded on the news of the financing and if they can hold their gains, even if its almost 50% off its day high, I see a potential spike that could be bought into or a morning panic after a climb pre-market. Either way, if the volume presents itself due to the sector and news, there are plays that can be made.

VBIV 

Another company in the COVID vaccine race. Though this company has not recently had substantial news, they have been in the vaccine talks enough to warrant interest in their stock. VBIV saw a multi month breakout this past week and has finished the week strong, holding its gains and the number of clinical trials continues to grow. Again, keep an eye on the action pre market but volume pre market will signal a “dip buy” on this stock as shorts try to sell off fading pre market highs, look for a short squeeze and the opportunity to capitalize off of that morning strength. Remember once the hype is gone, the price will continue to fade a bit as well, unless the companies trials lead to something substantial soon.

The last two tickers have a decent amount of hype around them and could be opportunities to make some trades this week or even possibly double a multi-month investment.

CKPT & ALNA

With the potential approval of an antibody that helps safely treat patients with recurrent or metastatic cutaneous squamous cell carcinoma , analysts have set CKPT’s price target for $20, that’s an upside potential of 1,115% from what it is currently trading at as of Sunday, July 20th. The timeframe for these gains may not be set in stone, but with the stock gaining some press, Monday looks prime for a buy on the breakout.

Similarly, ALNA is also a company in the sector that has some press based on their trial of an enzyme to treat rare and severe metabolic disorders that affect the kidneys. Like CKPT, analysts have given this stock positive potential growth with a target price for ALNA around $10 for a gain of over 600%. ALNA has been trading sideways for about 7 months with resistance around 2.50. With this hot biotech week coming up, I’m looking to play this if I see the price rise above 2.50 and potentially begin an uptrend.

All the tickers discussed are strictly for speculation and any investments made should be based on your own consensus.

– Jelani Bell

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