The Nasdaq have given up a good chunk of last week's gains as we enter into the last trading day of this holiday shortened week. Hope seems to be fading that monetary policy will start to be reversed any time in the near future, and 'higher for longer' is becoming more the order of the day in regards to interest rates.
The health of the consumer also continues to deteriorate and it looks like we are about to see one nasty UAW strike against the Big Three automakers that could last months, given the chasm of between the opening negotiating positions of the parties.
I am not going to rehash those themes in today's column. I thought we would end the week with some trial updates, technical observations and a new name on my buy list from the world of biotech/biopharma.
I took a new small position in ARS Pharmaceuticals (SPRY) this week, one of the few somewhat speculative bets I have made in recent months. The company has developed a nasal spray alternative to the EpiPen for the treatment of Type I allergic reactions which is dubbed 'Neffy'.
The EpiPen was first approved in 1987 and has four other imitations on the market currently. They all work via intra-muscular administration, either through needle and syringe or an auto-injector device. These devices induce reversal and resolution of allergic reactions in five to fifteen minutes in ~90% of cases.
SPRY is trying to introduce a better mouse trap to the market. Although highly effective, the painful application, inconvenient size of the EpiPen's auto-injector, and complicated mechanism of administration all act as headwinds to early intervention, which is crucial in the prevention of reaction progression.
Neffy, as a nasal spray, solves those problems. The device should be approved on September 19th. Given the size of the potential market and the company's rock-solid balance sheet, I am willing to make a small bet on this name.
I also want to give a shout out to my 'stock pick of the year' Exelixis (EXEL) . The company recently disclosed that a late-stage study evaluating its blockbuster drug CABOMETYX to treat advanced pancreatic cancer and advanced pancreatic neuroendocrine tumors was stopped early due to outstanding efficacy. The company needs to huddle with the FDA but trial data should support CABOMETYX being approved for these two new indications.
I think this is an underweighted positive for the company. I also think this increases the chances that the company eventually gets bought out in the high $20s or low $30s. Unblinded data from this study should also be presented later this year, which could be a potential catalyst as I don't think investors are properly valuing this recent development.
Finally, the SPDR® S&P Biotech ETF (XBI) is getting close to support levels that have held for over five years as the rally in the market this year has been extremely narrow and disappointing outside of the "Magnificent Seven". If the ETF drops another couple of percent points to its $75-$76 technical support floor, I will probably add to my holdings in this entity via covered calls. This has been a profitable 'rinse, wash and repeat' trade for me for many years now.
