The setup: MediciNova, Inc. (MNOV) has a Phase 2B trial for MN-166, ibudilast, indicated for progressive multiple sclerosis. The data will be released Oct. 28 at the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS) annual meeting. Typically, there’s a really nice run-up for companies that have later-stage trial results for a major disease like MS coming out on a specific date.

The back story: MediciNova is a low-float stock that doesn’t trade much, so you have to be careful. It has a market cap of just $20.67 million, so it’s not very liquid, which can be risky. On Thursday, trading volume was just shy of 150,000 shares, but that was a high-volume day; the average is closer to 50,000 shares traded per day.

How I’m playing it/what I’m looking for: I already have 1,000 shares purchased Sept. 6 at $5.22. As of Thursday’s close, MNOV is at $5.88.  I’d be looking to add to the position, buying on the dips, but only if it retraces to $5.50 or so. I’m planning on holding Medicinova at least until it hits $6.50 or gets within a week or two of that data release in late October.

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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 holds 1,000 shares in MNOV, purchased Sept. 6 at $5.22 per share; he has no options or open orders in the stock.

 

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