For Those Of Us Who Missed Puma

Puma Biotechnology (PBYI) was one of those legendary rocket rides in this thrill park of biotech that you want to buy in clear 20/20 hindsight. It is a development stage company working mainly on neratinib, a drug for breast cancer among other things, and its prospects moved the stock out of its slumber for its first couple months as a public company in 2012, into a wild ride up from around 20 to 260 in about two years. "Where was my buy order in 2012?" you have to ask yourself.

Well maybe the market is giving us a redo on that. There is another small, little known biotech working on the same thing and, if it makes you feel any better, Puma's neratinib has fallen on hard times as reported in the 2015 ASCO Conference. The drug is now showing some 2.3% more effectiveness than placebo with the added benefit of severe diarrhea. This news has crushed PBYI from 260 back to around 85: (click on image to enlarge)

Neratinib is not the only iron in the fire for Puma, but as this chart clearly shows, the market places a very high value on what happens to their breast cancer efforts. The incredible climb in the stock is now very broken.

Enter Oncothyreon (ONTY) and their similar effort against breast and other cancers. Their story is just the inverse of Puma with the stock sliding since 2012, but with a stunning reversal after some very promising data released just before ASCO this year:

The two are so similar that the developments of this year are creating some internet buzz about PBYI and ONTY being a pair trade, shorting PBYI and long ONTY, with talk of ONTY being the new Puma. I like ONTY technically and the insiders at the company have started liking the stock also lately with several million dollars worth being bought up over the last year or two by a variety of people. The "IH" (insider held) number is still a little too low for my taste (only around 8%) but this tiny company could possibly start attracting some more serious insider buys. The quiet consolidation it has been in the last two months showed virtually no response to the market correction - nice strong handed behavior that typically precedes nice climbs, if the other technicals are good.

So if you missed Puma and are willing to deal with the risk, you might want to look at ONTY as a redo.