In his first Executive Decision segment of "Mad Money" Monday, host Jim Cramer spoke with Dr. Vlad Coric, CEO of Biohaven Pharmaceutical Holding Co. (BHVN) , a migraine drugmaker with shares that are down from a secondary offering just last week.
Coric said it has been one year since Biohaven launched Nurtec ODT for the treatment of migraine. He said Biohaven expects to receive approval from the Food and Drug Administration (FDA) in the second quarter to use Nurtec for the prevention of migraine as well as acute treatment. Preventative use will be a game-changer for many patients, Coric said.
When asked about insurance availability, Coric noted that 90% of carriers will pay for Nurtec and Biohaven has affordability options available for those that don't.
Let's check out the charts one more time. We looked at BHVN last Nov. 19 and last July 16. In November we wrote, "The three charts above show some bearish divergences and that tells me that we could witness a correction or pullback in the weeks ahead. Take profits or raise your stop protection."
In this updated daily bar chart of BHVN, below, we can see that prices have worked lower since our November review. Prices are trading below the declining 50-day moving average line and below the 200-day moving average line. The On-Balance-Volume (OBV) line has been weak from November, so we know that sellers of BHVN have been more aggressive for several months. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line in sell mode.
In this weekly bar chart of BHVN, below, we have several troubling signs. Prices are trading below the 40-week moving average line, which is cresting. The slope of the 40-week line is not yet negative. The weekly OBV line shows a decline going back two years. The MACD oscillator crossed to the downside in December and is approaching the zero line.
In this daily Point and Figure chart of BHVN, below, we can see the software is projecting the $66 area as a potential downside price target.
In this weekly Point and Figure chart of BHVN, below, we see that a $63 price target is given.
Bottom line strategy: Biohaven may have a great product with lots of potential, but it is the stock we are concerned about. The charts and indicators on BHVN are not attractive. Continue to avoid the long side.