Trade Set Up - Antares Pharma Big Upside Potential
Antares Pharma (ATRS) is a biotech company, which focuses on creating products and then licensing them out to distributors and collecting the related royalties. The problem with this business model is that most of the money is made by the distributors. However, Antares is now beginning to move towards a proprietary product revenue generating biotech company. This means in addition to creating their own products, they will also be distributing and marketing them as well.
For the past six months, Antares Pharma stock has returned an impressive ~30% return. It's latest product is awaiting approval from the FDA . It is called Otrexup. Otrexup is basically a patented auto-injection system used to treat patients suffering from rheumatoid arthritis (RA) and other autoimmune diseases. Currently, RA is most commonly treated orally. According to the executives at Antares, this is an inefficient way of treating the disease. Using existing solutions, Antares has essentially created a way to delivery the solution via the skin. Thereby increasing its effectiveness of the medicine.
Otrexup is currently being reviewed by the FDA and will announce results sometime in October. Analysts have projected that Otrexup alone could generate about $250M in annual sales. This is significant given the fact that Antares has a current market cap of $577M. If in fact it does achieve $250M in annual sales, you can best believe this stock will skyrocket. As of June 30, 2013, its revenue for the three months ended was $5.8M. Annualized this and you can project revenues of only $23M.
From a technical perspective, there were two buy opportunities in the past six months. But there may be more opportunities in the future. The stock first broke out in late April and then broke out again in early July. These two points would have been great points to buy more of the stock or just to enter.
In order to manage risk
, I set my stop just below the breakout channel first at around $3.4 and then again at $4.0. This means if it falls below that price, I exit my stock and cut my losses.
This is a volatile stock and you can see huge fluctuations from day to day. You have to be able to hold through this normal volatility otherwise you might be tempted to exit when it is just a mere pullback.
As it stands now, it will be healthy for the stock to hold 4.43 and obviously anything above $4.6 is bullish. If it breaks the 50DMA it could be trouble in the short term.
Disclaimer: This article is written for informational purposes only and isn't intended as investment advice.
Disclosure: I am long ATRS.
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