The set-up: Axovant Sciences Ltd. is a clinical-stage biopharma company with a Phase III trial coming out in September for treatment for Alzheimer’s Disease.

Why others are buying it: The stock is up more than 80 percent this year, and it is nearing its all-time peak of $31 per share; it has some room to run to get back to that level, especially if people wind up getting the good news they’re expecting on this trial.

From a trader’s perspective, this is a jumpy stock, the kind of thing that moves a lot on news; catalyst traders like that when there is news on the horizon.

Why I’m not: With Alzheimer’s Disease, any time there is news people really speculate on the upside. If the trial comes out positive, it’s close to a double, a binary event, but 90 percent of the time with these types of drugs, the news doesn’t pan out and the stock trades way down; the downside potential is more than 50 percent.

I’m like everyone else in hoping that we someday see a cure, but I’m not getting too excited because it’s hard to believe the data is going to be good; the science for these Alzheimer’s drugs just hasn’t paid out.

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   Kyle Dennis runs Kyle Dennis’ Biotech Breakouts (biotechbreakouts.com). He is an event-based trader, who prefers low-priced and small-cap biotech stocks.  He currently has no shares, options or open orders in AXON; he last owned the stock on June 7, when he played it as a day trade.

Author: Kyle Dennis

Straight outta college Kyle Dennis taught himself to trade, and then made over $7 million in trading profits by the time he was 28 years old. Kyle reveals how to find, track, and profit from lucrative trades for exceptional profits. Thousands of traders follow him every day to learn how to target these high probability trades.

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