ASTX Still Ascending

Written by GSCR Staff   
Monday, 08 April 2013 11:09

Good Morning.  Hope everyone enjoyed the awesome weather we had in the East over the weekend, finally!  The big national title game tonight features Michigan vs. Louisville, and promises to be a good one.  As an Ohio State alum, I am glad to see the Wolverines made a good showing for the Big Ten by making it to the final, but it ends there.  Go Cardinals!

Earnings season for 1Q13 is upon us.  The fed continues to pump cheap money.  These two factors suit our goal here in the daily Market Monitor as we should see some nice pops in some of our previous and upcoming picks.

Today we will revisit one of our picks from 1Q13.  Back on February 26th we looked at Astex Pharmaceuticals (NASDAQ – ASTX - $5.39) at a price of $3.01.  The stock is up nearly 80% since then and even went from $5.12 to $5.50 in after-hours trading on Friday, even during a massive sell-off day with disappointing job numbers yet again.  There seems to be no end in sight to the run as the short-term analysis remains very favorable and very bullish.

Astex is slightly different from most of the bio-tech companies in the small cap space in that they are profitable, primarily from their drug that targets treatment of myelodysplastic syndrome and acute myeloid leukemia, Dacogen.  The company is continuing its new Dacogen ‘upgrade’, SG-110, to be used in treatment for myelodysplastic syndromes, acute myeloid leukemia, advanced hepatocellular carcinoma, and platinum-resistant ovarian cancer.  Early results are positive for SG-110.  Additionally Astex is developing an HSP90 inhibitor, AT13387 to be used in treatment for refractory gastrointestinal stromal tumors, castration resistant prostate cancer, and ALK+ lung cancer.  AT13387 is currently in Phase II.

RBC Capital was one of the Wall Street firms that initiated coverage of ASTX last week setting a long term price target of $9.00.  We think the $7.00 level is more in line with our goals of a short-term pop, and could occur in 2Q13.

Have a great day!

 

Aaron Schweitzer

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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