The market is getting a lift today as the bulls push resistance following a 4-week losing streak but the major indexes are off their highs. There hasn’t been any major headline news, negative that is, and economic gibberish doesn’t hit the tape until Tuesday which has given the bulls some breathing room. The bears have made their presence known by capping today’s gains and drawing blood but we still have another half of trading so anything can happen.
Before we go over the market’s numbers, we want to spend a few paragraphs talking about Seattle Genetics (SGEN, $14.50, down $0.54) which has been on a wild ride of late. After 14 years and $500 million in reserach, the company won its first approval from the Food and Drug Administration (FDA) on Friday for its innovative cancer drug, Adcetris, which treats two rare forms of cancer that attack the lymph nodes.
The drug will be used to treat Hodgkin’s lymphoma and systemic anaplastic large cell lymphoma. Patients who have already tried treating their disease with a bone marrow transplant or multiple rounds of chemotherapy will now have a new treatment option.
Adcetris was also a drug the FDA checked-off on for their “accelerated approval program”. One of the benefits, and one the FDA found especially appealing, was the fact it targets antibody to deliver the drug directly to cancerous tumor cells which saves the healthy cells.
Seattle Genetics will market Adcetris in the U.S. and Canada, while Takeda Group takes it global.
The stock made a nice pop on Friday and traded to a high of $15.93 before settling at $15.04. Shares were up strong in pre-market action, trading near $16 but have given back their gains after conflicting research reports.
Shares of Seattle Genetics have been under pressure even before Friday’s news as there was chatter the drug would be delayed in gaining approval. The stock hit a 52-week high of $21.41 in late June and we used the strength to close half positions in a trade we recommended back in early May when the stock was at $17. The options made 50% and we are still managing the other half.
We have been following the company for a few years and we told our subscribers we should hear good news before the end of August. We were looking for the stock to make a run up to $25 but we could get caught in the crossfire between a bull and a bear.
One brokerage firm believes Wall Street is under-estimating sales and says shares are at attractive entry prices, slapping an “Outperform” rating on the stock. Meanwhile, another brokerage firm reiterated its “sell” rating on the stock with a price target of $10.
We have done a ton of research on Seattle Genetics and we love their drug pipeline, not to mention their business model. Obviously, somebody’s research is flawed and we think the stock has been weak due to the overall market conditions along with the healthcare debate. Either way, we plan on digging into the company’s books a little deeper to see if we can find some clues.
As far as the market, the rally that was strong at the open has faded right at the resistance levels we went over this morning. The overseas markets are closed so the battle between the bulls and bears could get interesting in the final hour.
As we head to press, the Dow is up 47 points to 10,864 and has trade to a high of 11,020. The S&P is higher by 2 points and is at 1,125 following a run up to 1,145. The Nasdaq is advancing 5 points to 2,347 after kissing 2,397 at the open.
We will be back in the morning with a full update but the test at resistance and then the pullback doesn’t look good for the bulls.]]>