Drug and biotechnology stocks that offer a range of cancer therapies have come under the microscope this week after a five-day conference, put on by the European Society for Medical Oncology, concluded Tuesday. The Barcelona-based event provided an opportunity for leading companies in the space to present new findings as well as update patients and investors on the results of clinical trials.
The conference has gained popularity in recent years as more oncology data proliferating in the immuno-oncology era breaks new ground in the cancer sphere. Scientists submitted nearly 4,000 study abstracts for this year’s event.
Leading drugmakers Amgen Inc. (AMGN), Incyte Corporation (INCY), and Bristol-Myers Squibb Company (BMY) all presented at the conference with mostly upbeat results. Let's take a closer look at each company's findings and also use the charts to locate several breakthrough trading plays.
Amgen Inc. (AMGN)
Amgen develops and manufactures biotechnology-based human therapeutics globally. The $115.17 billion health care giant said at the conference that its colorectal cancer drug AMG510 is active and has significant clinical utility to warrant further testing. SVB Leerink analyst Geoffrey Porges wrote in a research note cited by Barron's that the drug exhibits an impressive disease-control rate. "The incremental disclosure from the colorectal cancer cohort suggests that '510 is indeed a viable drug in this disease, with early efficacy signals that are comparable to existing approved late line medicines in this disease," Porges noted. On the earnings front, Amgen has surpassed analysts' expectations for the past four consecutive quarters. As of Oct. 4, 2019, the stock offers an attractive 3% dividend yield but has returned just 1.18% year to date (YTD).
Since setting a 2019 high in late August, Amgen shares have retraced to the $190 area, where price finds crucial support from a 12-month horizontal trendline and the 50% Fibonacci retracement level. Furthermore, a recent cross the 50-day simple moving average (SMA) above the 200-day SMA – referred to as a "golden cross" – indicates the emergence of a new uptrend. Those who buy the pullback should place a stop-loss order below $87.50 and target a move back to the previously mentioned August high at $210.97.
Incyte Corporation (INCY)
Wilmington, Delaware-based Incyte focuses on the development and commercialization of various therapeutics. The company's marketed drugs include Jakafi, which treats two types of rare blood cancer and graft versus host disease; rheumatoid arthritis treatment Olumiant; and oncology drug Iclusig for chronic myeloid leukemia. Incyte provided an update on its duct cancer drug permigatinib in Barcelona, saying that its study data generally fell in range with previously released data. "Collectively, these data are encouraging particularly in a paradigm where options remain limited," wrote, Andrew Ang, a UBS analyst who attended the conference, per the same Barron's story. Trading at $74.88 with a market capitalization of $16.10 billion, Incyte stock has gained almost 18% so far this year as of Oct. 4, 2019.
The drug developer's share price has traded roughly in a $15 range since April. A pullback over the past two months within a descending channel now finds key support from the trading range's lower trendline at $72. Traders who open a long position at these levels should set a take-profit order near $88 – an area where the price may encounter significant overhead resistance from the range's top trendline. Manage risk by cutting losses if the stock fails to hold $72 support and moving stops to the breakeven point if price rises above the 200-day SMA.
Bristol-Myers Squibb Company (BMY)
With a market value of $81.05 billion, Bristol-Myers develops, manufactures, and sells biopharmaceutical products. It offers drugs in oncology, immunoscience, cardiovascular, and fibrotic diseases. In January, the company acquired Celgene Corporation (CELG) in a $74 billion deal to bolster its lineup of cancer drug offerings. The New York-headquartered drug manufacturer presented follow-up results of melanoma patients treated with a combination of its two drugs Opdivo and Yervoy. In the study, more than 50% of melanoma patients were alive after five years – this compares to a survival rate of roughly 5% over the same period before these immuno-oncology drugs became available, per Reuters. As of Oct. 4, 2019, Bristol-Myers stock is trading 1.53% lower YTD as investors remain concerned that the company overpaid for Celgene. A 3.33% dividend yield partially offsets lackluster share price performance.
Despite Bristol-Myers underperforming its drug manufacturer peers for most of this year, the stock has trumped its competitors by about 5% over the past month. After printing a 52-week low on July 23, the price has trended steadily higher to now trade just 6.5% below its 2019 high. A dip to a short-term trendline this week provides traders with a suitable entry point to join the upside momentum. Those who execute a trade could scale out 50% of their position at the $52.99 YTD high and exit the remaining half near the next major area of resistance at $56.50.