Immunomedics Inc. (IMMU) jumped about 20% on Friday after raising $125 million in a private placement of convertible preferred stock, restructuring its management team, and terminating its license agreement for IMMU-132 with Seattle Genetics Inc. (SGEN).
The market appears confident that the company will secure a better licensing deal after the activist hedge fund Venbio secured four board seats during March’s annual meeting. The incumbent board of directors had insisted that the hedge fund was going to try to unwind the Seattle deal and self-develop IMU-132 at the expense of existing shareholders. That said, Seattle Genetics still has enough warrants to become the largest shareholder, if desired.
From a technical standpoint, the stock broke out from a descending triangle chart pattern and its 50-day moving average at $5.88, but remains below its roughly $7.00 highs. Friday’s candle appears likely to become a spinning top, which indicates indecision among traders and investors. But, technical indicators remain mostly bullish with the relative strength index (RSI) below 70.0 and the moving average convergence divergence (MACD) experiencing a bullish crossover. Traders should watch for a move past R1 resistance at $6.51 or a breakdown back below trend line support at around the 50-day moving average of $5.88.
Immunogenics future boils down to whether investors believe Venbio can either attract a better offer than Seattle Genetics or generate more value conducting the trial on their own. In the meantime, traders are likely to see significant volatility with the potential of a new partnership announcement or other decisions from the board. For now, it appears that investors remain a little uncertain about the company’s prospects given the spinning top candle and the lack of movement in the stock’s price.
Charts courtesy of StockCharts.com. Author holds no position in stock(s) mentioned except through passively-managed funds.