Trade: NPS Pharmaceuticals (NPSP); ISIS Pharmaceuticals

Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning.

Not quite sure how or why, but it appears that all of the stars appropriately aligned today, allowing me to both clear a position and start my replacement for that position.

Today I sold my remaining position of NPS Pharmaceuticals for $45.90  I have come to learn that there are terms to the sale which would actually cost me more than the few cents I'm missing out on of the full $46 deal - even when including my trade fees.  As such, it seemed wiser to take this money, have it at the ready and save myself a few bucks over all.  Outside of the reorg costs I didn't know I'd incur, this trade shouldn't be the least bit surprising as it's part of the buyout deal NPSP management agreed to with Shire PLC.  This simply finalizes the deal.

In addition to the above sale, I started out a small position in ISIS Pharmaceuticals.  After bouncing between $67 and $72 for awhile, the stock finally took a hit and came down to the prices I was waiting for.  In fact, I was able to buy my shares for $63 per share.  The news that took this down was in relation to the results they announced in a press release today for a phase 2 Diabetes drug meant to help patients with type-2 diabetes, who struggle with insulin therapies.  The results were announced as favorable, under a 36-week period.  While, initially this seems great, it was quickly surfaced by a, renown and sometimes reviled, reporter to the biotech industry that the test was meant for 27 weeks.  When calling this out, there was also some questioning regarding leadership's transparency.  The second thing to add to the push was that the biotech sector, as a whole, was taking a hit.  I had been feeling it was due for a pullback after such a strong surge at the start of the year, it appears we're getting it now.  The stock did bounce off of its 50 day moving average but I feel like there could still be some more downside - perhaps down to the 100 day average of around $53.

Despite all the news and action, I felt like this was a good chance to start a small position.  While I understand the reporting and do sense that it should raise eyebrows slightly, I don't think the facts, which were pointed out, are game changers.  Instead, it's news reports coupled with action like this that is likely to shake out the people with weak conviction.  The press release also announced that ISIS is looking for someone who has strengths in the Type-2 Diabetes market that may be willing to partner with ISIS and help bring out the value of what they've found/created so far.  To me, there's more upside potential if someone were to get in on this, than there is downside risk were they not to find someone.  The results were good, but apparently it takes longer to get the results than expected.  Keep an eye out for the release of more detailed information later, when this is presented at a drug conference.

To me, this company has a large pipeline with lots of possibilities to look forward to.  This helps create a buffer should a drug like this go bust.  Not all of them will be a huge success.  The anti-coagulant, and some of the neuro and heart-disease drugs they're working on appear to have more potential and that's what people are watching.  This is a speculative stock and I will treat it as such.  I feel this company, as well as the biotech sector needs and will likely have a much stronger correction yet.  As such, I currently put my next purchase price at $57.  This, too, would likely be a small position.  I won't start adding larger positions unless we start nearing or surpassing the 200 day moving average, which is currently around $42.