2 Pharmaceutical Stocks Touching Record Lows

Merrimack and Erytech stocks are getting destroyed after stopping drug production

Managing Editor
Jun 25, 2018 at 3:10 PM
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Stocks are trading lower this afternoon while the VIX explodes, as Wall Street reacts to global trade tensions. Three individual stocks making noteworthy moves are financial concern American Express Company (NYSE:AXP) and drug stocks Merrimack Pharmaceuticals Inc (NASDAQ:MACK) and Erytech Pharma SA (NASDAQ:ERYP). Below, we will take a closer look at how shares of AXP, MACK, and ERYP are trading on the charts.

AXP Options Traders Put-Heavy Ahead of Washington Win

Shares of American Express are 1.6% higher at $98.75, bucking the broader sell-off, after the Supreme Court of the United States (SCOTUS) ruled in favor of the company in a merchant fee dispute. AXP stock touched a record high of $103.24 on May 22, but the $101-$103 region has acted as a speed bump for the blue chip all year.

In the options pits, traders have been targeting puts over calls at an unusual clip. This is evident with data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showing the security with a 10-day put/call volume ratio of 1.60, in the 76th annual percentile. Today, AXP puts are trading at two times the average intraday pace, with apparent buy-to-open activity happening at the August 92.50 put.

MACK Gaps Lower on Drug Trial Cancellation

Merrimack Pharmaceuticals stock has shed 42% to trade at $5.34 -- just off a record low of $5.20 -- after the company announced that it is ending the development of its pancreatic cancer drug, MM-141. MACK had already been on a long-term downtrend, and has now lost 60% year-over-year. It's the worst stock on the Nasdaq this afternoon.

Unsurprisingly, brokerage firm Baird cut its price target to $7 from $12 after the announcement. This is far from the only bearish analyst note the drug maker has seen, however, with all three following the stock currently sporting tepid "hold" ratings.

Meanwhile, although MACK is on the short-sale restricted (SSR) list today, quite a few shorts are likely cheering. Short interest represents over 11% of MACK's total available float, or about 22 days of trading, at the drug stock's average volume.

ERYP Falls to Record Low on Drug Update

Similarly, ERYP stock was last seen 30% lower at $12.95 -- and just off a record low of $12.54 -- after the firm said it will cease production on its acute lymphoblastic leukemia (ALL) drug. Erytech is also withdrawing its European marketing application for the drug. ERYP stock is now down more than 41% in 2018.

Just three brokerage firms cover the stock, and as of Friday all three were sporting a "strong buy" recommendation. What's more, ERYP stock's average 12-month price target of $42.67 is more than triple the shares' current level. A flood of downgrades and price-target cuts could exacerbate the equity's slide.


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