STW Biotech Stock
Reports & Analysis
OREX EP 4.14
SIGA EP 6.67
GNBT EP .36
- 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.
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.
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
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.
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
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