In his first "Executive Decision" segment of Wednesday's Mad Money program, Jim Cramer spoke with Vlad Coric, CEO of Biohaven Pharmaceutical (BHVN) , the biotech.
Biohaven just announced a global partnership with Pfizer (PFE) to bring its migraine treatment, Nurtec ODT, to patients outside the U.S. Coric said in the deal, Biohaven retains the U.S. rights to Nurtec, but leverages Pfizer's global presence to commercialize the drug around the globe.
Nurtec remains the only drug approved for both the treatment and prevention of migraine. There is no other therapy that does what Nurtec does, Coric noted.
Coric said the company has a broad pipeline of neuroscience-based drugs in development and it will be using the proceeds from the Pfizer deal to double-down on the efforts.
Let's check and see what the charts are up to after their earnings numbers the other day.
In this daily bar chart of BHVN, below, we can see that prices made a small double top pattern in October and early November. Prices gapped lower the other day breaking below the rising 50-day moving average line.
Trading volume increased sharply and the On-Balance-Volume (OBV) line made a new low for the move down. A weak OBV line tells us that sellers of a stock are being more aggressive. The OBV line peaked in June on BHVN.
The Moving Average Convergence Divergence (MACD) oscillator has been making lower highs since July and is close to breaking below the zero line for an outright sell signal.
In this weekly Japanese candlestick chart of BHVN, below, we can see two small upper shadows around $150 and that was a tell in hindsight. This week's long red (bearish) candle sets the tone for further weakness. Prices are still above the rising 40-week moving average line but that is not much consolation.
The weekly OBV line looks toppy and the MACD oscillator has crossed to the downside for a take profits sell signal.
In this daily Point and Figure chart of BHVN, below, we can see a potential downside price target in the $74 area. Ouch.
In this weekly Point and Figure chart of BHVN, below, we can see a $106 price target at this point in time.
Bottom line strategy: In our September 10 review of BHVN we wrote that "Continue to hold longs. Raise stops to $125 from $115. The $155-$163 area is our first price target with the $181-$188 area after that."
Unfortunately prices stopped rising at $151 so I do not know if traders took profits or not. The gap lower should have stopped traders out around $125 or lower. Now I would take a wait and see what happens stance with BHVN. Maybe it rebases above $110 or perhaps it sinks further towards one of our Point and Figure targets.
We're holding a Veterans Day Sale for our Action Alerts PLUS investment club. Get in on the conversation and get the latest investment ideas and trading strategies. For 48 hours, we're offering 30% off with this special sale. Click here and save $150.
