I have discussed Aurinia Pharmaceuticals (AUPH) many times on RealMoney.com. It has two very large market opportunities for its voclosporin drug. While there is no sure thing when it comes to biotechnology stocks, the odds of positive outcomes for AUPH is quite high.
Aurinia has been given priority review by the FDA for voclosporin for use in dealing with lupus nephritis. It has a PDUFA date of January 22, 2021. There are no approved treatments for lupus nephritis at this time.
Aurinia also has an ophthalmic solution of voclosporin that is used for dry eye syndrome. It has just completed a phase 2/3 clinical trial and expects to release results in the fourth quarter of 2020. Early results have been very robust and there is a good likelihood that this will be a 'best in class' drug for this indication.
These are two very big catalysts that are approaching soon and there is likely to be some anticipation of a positive reaction to the news. The chart presents a particularly interesting setup. There is a clear downtrend that started in January and has largely been a function of impatient investors that aren't willing to wait for the news catalyst. They are likely to grow more optimistic as the announcement dates approach. Once the downtrend line is breached to the upside that should attract additional interest from other traders who will start to wonder if now is the time to jump on board.
This trade is primarily an exercise in psychology. We know the news is coming and we know it has a good likelihood of being positive, so there is a good chance that buyers will start to anticipate a move and when they do the stock should be in good shape for a sustained advance. The downtrend is the obvious technical hurdle.
HC Wainwright has a $34 target on the stock.