13:44 GNLB Small Cap Profile: Genelabs Technologies -- positive recent company developments and a bullish technical outlook (2.31 +0.21)
GNLB is trading up 10% today, taking the stock to fresh 10-month highs. We wanted to provide some additional information on the stock given its recent strength (+25% in April), recent positive developments and bullish signs from a technical standpoint... First, some background on the co: GNLB is a micro-cap (mkt cap $62.9 mln) biopharmaceutical co currently developing Prestara, an investigational drug for women with systemic lupus erythematosus. GNLB also pursues drug discovery of novel anti viral compounds for the treatment of hepatitis C (HCV)... While today's move in the stock comes on no company-specific news, we spoke with the co's CEO about the recent strength and he pointed to two possible explanations: 1) he noted that it may be taking awhile for investors to absorb the positive FDA news released by the co on 4/2 (co reached an agreement with the FDA on a SPA for its Phase III clinical trial of Prestara for lupus), and 2) possible spillover interest in companies involved in hepatitis C coming out of the European Association for the Study of the Liver (EASL) conference, which is currently taking place. Although GNLB is not presenting at that conference, the co's CEO thought that it may be generating interest in HCV related stocks in general... The stock also looks compelling from a technical perspective. We note that GNLB has surged up over ~25% in Apr on a massive pick up in volume (daily chart). Looking at the weekly chart, it can be seen that the stock reached an all-time low of 0.70 before surging in Jun '06 to 2.55 after the co announced its collaboration agreement with Novartis. Since that time, the stock has been confined to a trading range that was established from the Jun '06 gap up low/high of 1.12/2.55. With this month's price action at hand, the stock is nearing the upper end of that range on healthy volume. If GNLB can manage to break above that level and sustain those gains, then the possibility of further upside increases (especially considering that a broad higher-low formation would have established itself at that point). Overhead resistance is at 2.55-2.60, ~3.00, & ~3.30, while short-term support can be found below at ~2.10 & ~1.90... Looking at GNLB's fundamentals, since the co is still in the development stage, it operates at a loss and primarily generates its revs through collaborations with Gilead (GILD) and Novartis (NVS), and to a lesser extent Watson Pharma (WPI). Given this, valuing the stock using traditional ratios is not appropriate... Float: $23.3 mln shares; average daily volume: 127K shares. (PROFX)
Share This Post:
   
| |
|
122.84
30.60
