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Stock Trade of the Day

- Will run to $23+ on
BARDA Contract-Buy 5-16-11

This Weeks Stock Pick

6-21-2010 Stock Recommendation SIGA

While most of our recommendations are for short term swing trades, this is our first Stock of the week recommendation for a possible long term position. The current SIGA news, trend and positioning should generate a double or triple on a swing trade with the expected finalization of the BARDA contract. We see even greater long term potential for this company with worldwide distribution and an impresive pipeline. We have followed SIGA for years, since it made the transition from a small tech company to an emerging biotech. The largest stockholder of SIGA is one of the world’s most successful investors, Ron Perlman which is an indicator of the potential of this company.

Recent changes in the board of directors, the doubling of staff and other factors point to a positive outcome of the long awaited BARDA contract of over $500 million for the smallpox antiviral ST-246. The growth of the SIGA pipeline which contains the ST-669 antiviral that recently received its first round of Government funding and in early tests is effective against over 90% of all virus strains know to exist. SIGA is also progressing on several other pipeline drugs some of which show promise as an answer to the growing problems of Lassa and Dengue fevers.

St-246 is the first antiviral drug developed using SIGA’s proprietary new technology. It has proven to be 100% effective in curing the smallpox virus. Currently our government and most others stockpile millions of doses of smallpox vaccinations. St-246 will cure smallpox for up to 2 weeks after a person is exposed to the virus whereas the current vaccinations need to be given before or immediately after exposure. Smallpox is considered to be one of the top biowarfare threats in the world and when (not if!) it is used as a weapon ST-246 will save many lives.

Update: 6-23 Breaking News today of SIGA's successful completion of another round of safety trials moves them one step closer to An FDA NDA. This may move the timeline from 2011 back into late 2010. While FDA approval IS NOT needed for the BARDA contract some foreign countries will want this in place before purchasing St-246. From an income perspective the eventual FDA approval will open the door to possibly millions of courses being sold to institutions and private companies in the US as well as being used as an adjunct therapy for vaccinations.

The share price took a hit last year when the anticipated BARDA contact did not come to fruition when expected in September and the RFP was changed. This was not a reflection on SIGA or the technology but due to bureaucratic changes that came with the new administration. With the recent hiring of key personnel for production and the addition to the board of influential insider Andy Sterns it now appears that not only will the BARDA contract be completed in the near future but that SIGA management is positioning for sale to the World Health Organization and other countries for their strategic defense stockpile programs.

The dilemma we have with SIGA is should one take profits on the announcement of the BARDA contract which we anticipate will drive the share price to our short term target of $22 or continue to hold it as other countries and the WHO come onboard with even potentially larger contacts. Our long term target for SIGA as ST-669 progresses toward FDA approval in several years is $84 at which point we anticipate a buy out or merger with major pharma.

While we anticipate trading in a range between $6 and $8 until the finalization of the BARDA contract we see the current entry point of below $7 per share is a bargain. We give the contact a 90% chance of finalization in the coming weeks or months. If for some reason this does not happen we still see the long term pipeline as enough to justify an investment in SIGA

We are Long SIGA.

Company Overview:
SIGA Technologies, Inc., a bio-defense company, engages in the discovery, development, and commercialization of products for use in defense against biological warfare agents comprising smallpox and arenaviruses. It also involves in the discovery and development of other novel anti-infectives and antibiotics for the prevention and treatment of serious infectious diseases. The company primarily offers ST-246, an orally administered antiviral drug that targets orthopox viruses. It also develops anti-arenavirus drug candidates, such as ST-294 and ST-193, which demonstrate antiviral activity in cell culture assays against arenavirus pathogens; and broad spectrum antiviral candidate, ST-669, against viruses in the Poxviridae, Filoviridae, Bunyaviridae, Arenaviridae, Flaviviridae, Togaviridae, Retroviridae, and Picornaviridae families. In addition, the company has four drug series in the pre-clinical development stage, including ST-610 and ST-148 for dengue virus of the genus Flavivirus. SIGA Technologies, Inc. was founded in 1995 and is headquartered in New York, New York.

SIGA Technologies Inc SIGA: NASDAQ    Chart & Technical Analysis

Bollinger Bands
SIGA is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.


SIGA's MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

On Balance Volume

The On Balance Volume indicator (OBV) presently offers a bullish signal. This is because the slope of the indicator is positive and shows that there is considerable buying interest.

Directional Movement Index
The ADX is below 20 which signifies that SIGA is not trending. Therefore the Bullish signal provided by the Directional Movement Index is not confirmed and it is too early to act solely based on this indicator.

Ultimate Oscillator
The Ultimate Oscillator is currently at 57.32% which indicates that the stock is neither overbought nor oversold. You should note the trend of the Ultimate Oscillator to see if the internal strength of SIGA is improving or weakening.


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