|Written by GSCR Staff|
|Wednesday, 24 April 2013 08:03|
Good Morning! Almost exactly a year ago, in our inaugural edition of The 30-30 Report, we recommended buying Arena Pharmaceuticals (NASDAQ – ARNA) ahead of its meeting with an FDA advisory panel, regarding the potential approval of its weight management drug. It was approved 10 days later and the stock ran 30%. Today, we highlight a stock appearing before an FDA panel on May 2nd, and if approved, the stock will soar.
We have spent a fair amount of time following a variety of oncology drugs under development and we believe that Aveo Pharmaceuticals’ (NASDAQ – AVEO - $8.17) Tivozanib, a treatment for renal Cell Carcinoma, could very well likely get the nod, driving the stock sharply higher. RCC is a cancer that starts in the kidneys and worldwide it is estimated that more than 250,000 people are diagnosed and more than 100,000 people die from the disease each year.
The vascular endothelial growth factor (VEGF) pathway plays a significant role in angiogenesis, which is critical in cancer. Angiogenesis, the formation of new blood vessels, is essential for endothelial cell proliferation, migration and survival. There are five known VEGF ligands (A, B, C, D, PLGF) and three VEGF receptors and AVEO’s platform drug appears to inhibit the VEGF pathway it may be critical to effectively block all three VEGF receptors as each plays an important role in cancer angiogenesis.
Clinical trials not only demonstrated strong efficacy but fewer toxic side effects.
The stock has been trending only incrementally higher, but on ever-increasing volume and the stock is still $6, or 43% below its 52-week high. This signals to us that the Street is just starting to0 warm up to the potential, although it is not broadly sold on the possibility of approval. With that said, we believe downside risk is limited at current levels and if approved, those that do not hop on board could see this stock be a huge mover next week, approaching or even eclipsing its year-high.
With the risk reward in favor of the trader willing to take some risk, we recommend getting exposure to AVEO’s shares today via outright purchase or call options.
Have a great day!
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.
This Market Monitor blog was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research, which typically highlights small cap companies, and Goldman Opportunity Research, which features micro cap companies in a sponsored research format. Thus, the Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports.
It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.
ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.
For more information, visit our Disclaimer: www.goldmanresearch.com