Earlier this week we discussed the rising price trends of both Dendreon (DNDN) and Advanced Cell Technology (OTCBB: ACTC), as both stocks made significant gains during the opening weeks of 2012.
Advanced Cell, on the other hand, hit highs of right around seventeen cents on heavy volume, before volume just as heavy took it back down closer to the thirteen cent mark on Wednesday.
Both have opened the new year on a high note, although only one of these two runs looks to have had the short term legs to sustain the huge gains.
For Dendreon, it was the news of rebounding Provenge sales that sparked the run - and sparked the shorts to start covering, which is why investors might not have seen the upper limits yet, at least for the short term. Shares took a breather on Tuesday and closed at under thirteen dollars, but another dollar-plus increase on Wednesday was a key indicator that Dendreon is alive again, although the short term volatility is likely not finished.
Unfortunately for ACTC, the run that ignited the rise to seventeen cents was not supported by any major news event, and just as easily as the swing/momentum/day traders jumped in - they jumped out, hence the significant reversal on Wednesday.
The potential of ACT remains, however, and regardless of this week's volatility and short term price action - which may have more to do with shares associated to a lawsuit resolution than to anything else - 2012 could prove to be another milestone year for this company that has become the arguable leader of embryonic stem cell-based treatments.
As ACTC returned to earth, DNDN continued to climb - along with some other potential heavy hitters, such as Human Genome Sciences (HGSI) - who received a boost from positive comments relating to Benlysta sales and Cytsorbents (OTCBB: CTSO) - which opened the new year by announcing first-ever revenues and potential partnerships.
Continued Provenge sales growth throughout the year is key for DNDN in sustaining the rebounding share prices, as the infrastructure necessary for meeting increasing demand is already in place. Previous expectations had Provenge realizing over a billion dollars in sales this year, but the trials and tribulations surrounding pricing and reimbursement have tempered those expectations somewhat.
Still, few doubt that the product will eventually become a blockbuster.
Advanced Cell Tech has a pipeline in the much earlier stages, so there's little that can occur that will alleviate any threats of volatility. Positive updates from the ongoing trials would most likely provide another price boost - although probably only a temporary one - while news of a partnership or reverse split (that coincides with a move to a bigger trading board) could also spark new interest.
Both companies should be considered as potential buyout candidates.
The opening days of 2012 have definitely come with a thunder. Many companies opened the year on the rebound, but as we can see here, the rebounds can fizzle just as easily as they developed.
Especially in the biotech and health care sectors.
Keep watch on the price runs, because all too often it's worth taking some money from the table when these runs materialize, especially in a play like ACTC that has demonstrated time and again that it cannot - at least not yet - sustain higher price moves.
Disclosure: Long CTSO.