Immunomedics, Inc. (IMMU) shares have soared more than 40% over the past five sessions after preliminary data from its Phase 2 clinical trial showed a positive treatment effect. Patients that received a weekly dose of labetuzumab govitecan experienced median progression-free survival of between 3.6 months and 4.6 months, depending on the dosages. These figures were better than competing therapeutics that have achieved regulatory approval.
Given the stock's multi-day run-up, traders could see some profit taking on Tuesday and Wednesday as early traders lock in profits. The good news is that many analysts were bullish on the stock even prior to these new Phase 2 results. For instance, Cowen & Co. analysts indicated that IMMU-132's biologics license application (BLA) is on track. The analysts expect an update in the second half of the year while maintaining a robust $15.00 price target on Immunomedics stock. (See also: Immunomedics Breaks Out, but Will It Last?)
From a technical standpoint, the stock broke out from R2 resistance at $10.13 and upper trendline resistance at around $10.75 to fresh highs. The relative strength index (RSI) points to overbought conditions at 72.49, but the moving average convergence divergence (MACD) remains in a strong bullish uptrend. Traders should maintain a bullish bias on the stock over the medium term given the significant run-up and breakout.
Traders should watch for some short-term consolidation given the strong move over the past five days. In particular, trendline support at around $10.75 will be a key area to hold as traders lock in profits. A breakdown from these levels could send shares to R2 support at $10.13 or R1 support at $9.35. A rebound from these levels could send shares to retest highs at around $12.00 as traders look toward the next run higher. (For more, see: Three Junior Biotechs Ready to Run.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.