The Advaxis (ADXS) Trade

By Unknown Thursday, February 26, 2015
A long position was entered in Advaxis (ADXS) on February 18th in the $7.50s, to be treated as a swing position. Shares were bouncing off of a double bottom pattern which fueled the speculative trade. Besides the established double bottom, the short term downtrend was broken, MACD was beginning to turn bullish, and RSI was moving higher after bottoming out.

Advaxis develops immunotherapies for cancers and other diseases. It's currently focusing on HPV related cancers. The immunotherapy sector has been all the rage recently (KITE, JUNO), and at a current market cap of $210M, and a phase 2 drug candidate gearing up for phase 3 tests, ADXS could fetch a much higher valuation.

Consider this, Bristol Meyers just bought Flexus for $1.25B. Flexus, like Advaxis, develops immunotherapies to treat different cancers, however, unlike Advaxis, Flexus' lead drug candidate is still in preclinical stages. There seems to be a fundamental mispricing for Advaxis.

Advaxis is part of several collaborations with some big pharma names, such as Merck, Incyte, and AstraZeneca, and a lead drug developer from Merck recently switched jobs to join Advaxis as Chief Medical Officer.

The pop from $7.50s to $8.00s on February 18th was caused by the completion of an offering at $7.50 with Adage Capital, a successful healthcare hedge fund that now owns 20% of ADXS. The stock dropped hard in late January after a misleading short article was published by Richard Pearson, who profited by taking a short position before releasing the article and then sold into the heavy volume sell off. In reality, all he did was create a buying opportunity which I thank him for, as all of his bearish points have been dispelled by the recent Adage Capital deal and Adam Feuerstein from The Street.

What you have here is a textbook technical swing trade that is backed up by some strong fundamentals. This stock has been playing very well with its 50 day ma, the MACD is just turning positive, and RSI can move a lot higher. ADXS will continue to be held as a swing position until it decisively breaks below its 50 day MA.
The Wall Street Fox

The Wall Street Fox utilizes fundamental and technical analysis to generate investment ideas. TWSF holds a MBA, and is currently preparing for the Chartered Market Technician (CMT) designation.

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