Cancer Stocks Weekly Review: Tracking the Market

by Alan J. Brochstein, CFA
AB Analytical Services

After plunging in the weeks following ASCO, cancer stocks moved with the market this week. The lists below, with data from StockVal, are comprised of domestic companies primarily with market caps in excess of $50mm, ranked by the return this past week. If the reader believes that there are erroneous inclusions or exclusions, feel free to let me know.

STRONG

WEAK

There were even fewer outliers in this holiday-shortened week, with 4 double-digit gainers and just one double-digit decliner. The median return of 1.6% was slightly ahead of the S&P 500 return (for the first time after ASCO), and the average of 1.4% was in line. The volatility decline within the group over the past two weeks reflects the seasonality of quarter-end as well as the normal “calming” that follows all the reaction to the news out of ASCO.

Trubion (TRBN) was the only big loser on the week, correcting after a run-up last week. The company’s move from its IPO price last year at 13 is being fueled by positive news on a drug for rheumatoid arthritis. Cell Therapeutics (CTIC) earned the top spot, but it remains a big loser year-to-date. The gain was most likely just a partial retracement to the plunge that occurred after the company announced a securities registration filing in early June. Micromet (MITI) bounced back from a drubbing in the prior week that was related to a financing as well. Dendreon (DNDN), which remains a winner for many investors, added to its recovery following the FDA setback on a positive study regarding cancer vaccines. Adventrx (ANX) has been consolidating between 2.50 and 3.00 for a few months after bouncing off of 2 in March. The company has two lead candidates, CoFactor (P2/P3 for metastatic colorectal cancer and advanced breast cancer) and ANX-530 (late stage vinorelbine tartrate reformulation for non-small cell lung cancer). This company went public in late 1996 (moved to American Stock Exchange 3 years ago), has traded between 0 and 5 the entire time and has experienced no growth in anything beyond its pipeline except in share count! With that said, the company has no debt, a nice looking chart and probably won’t need to issue equity for a couple of years. On a break of 3, this one might merit attention.

The two screens below attempt to focus the investor on stocks that are working. The momentum list highlights stocks beating the market over the past month and quarter but eliminates those that have had extreme moves. The rebound list highlights stocks that are oversold but showing one-month relative strength without too much one-quarter relative weakness (if at all).

Clevland Biolabs (CBLI) shows up on both, as it has been a strong performer since its IPO at 6 last July but has consolidated lately. The company has been around only 4 years and focuses on Protectans and Curaxins. I won’t even pretend to know what they are! The applications, though, are very interesting. If you visit their website, you can see the large applications they target. Their lead candidate (CBLC-102, P2) may treat prostate cancer. Exelixis (EXEL) stands out on the list in terms of its attractiveness from a technical perspective. The company has developed internally several compounds aimed at the treatment of many different cancers, with many in Phase 2 trials.

SHOWING MO
Parameters: 4-week outpeformance (S&P 500) of 3% or more, 13-week outperformance of 10% or more and Price Momentum Index of <2

(Note that several of these are in the process of being acquired)

POTENTIAL REBOUNDS
Parameters: 4-week outperformance of >5%, 13-week underperformance of <5% and Price Momentum Index of <0.