2 Drug Stocks Climbing on FDA News

CRSP and KMDA stocks are attempting to take out resistance

Managing Editor
Apr 16, 2019 at 10:24 AM
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Two pharma names are scaling the Nasdaq this morning, thanks to favorable rulings from the Food and Drug Administration (FDA). First up is CRISPR Therapeutics AG (NASDAQ:CRSP), up 9.1% to trade at $40.52, after the FDA granted fast-track designation for CTX001 -- a treatment of transfusion-dependent beta thalassemia, a blood disorder -- made by CRISPR and Vertex Pharmaceuticals (VRTX). 

Thanks to a late-February bull gap, CRSP stock broke out of a channel of lower highs and lows that started last May. Today, the shares are attempting to end atop the $40 level -- an area that has served as resistance for the last month -- and their 200-day moving average, which would mark a feat not accomplished since September. CRSP has now added more than 30% in 2019.

A short squeeze could keep the wind at the equity's back. Short interest increased by 18.5% in the two most recent reporting periods, to a record high 5.26 million shares. This accounts for a healthy 17.6% of CRSP's total available float, and nearly two weeks' worth of pent-up buying power, at its average pace of trading. 

Then there's Kamada Ltd (NASDAQ:KMDA), up 8.5% to trade at $6.54, earlier tapping a nearly two-year high of $6.70. This morning, the company said it received a letter from the FDA stating it had satisfactorily addressed concerns regarding a study of its Inhaled Alpha-1-Antitrypsin to treat a genetic disorder. Kamada expects to initiate a late-stage trial in the second half of 2019.

This is pacing to be Kamada stock's best day since June 2017. KMDA shares have struggled to top the $6.25-$6.50 area since September, and were rejected here in late February. However, their subsequent pullback found support at their 200-day moving average. Today's news could prompt more analysts to take a look at Kamada stock. Only two brokerages are currently in coverage, doling out "buy" ratings and a $9 price target.


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