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Saturday, October 30, 2010

AVNR: NUEDEXTA Approved as Longs Celebrate



The good news is that longs of Avanir Pharmaceuticals can celebrate as the company announced the FDA approval of Nuedexta on Friday evening. Nuedexta is the first FDA-approved treatment for pseudobulbar affect (PBA), a neurological condition that leads to spontaneous episodes of laughing and/or crying.

It's been a long road to approval for Avanir and Nuedexta, with previous safety concerns causing the FDA to pause, but according to Friday's press release, Avanir expects to have the product on the market at some point during the first quarter of 2011.

With no other approved treatments on the market, Nuedexta could quickly start chipping away at the analyst estimates of $350-$500 million in annual sales.  If even a portion of those predicted numbers are reached, the AVNR stock is due for some serious price appreciation, and if after hours trading on Friday is any indication, a quick double could be in order.

However, the games may still be played.

On very significant volume at just before three o'clock on Friday, shares of AVNR plummeted to a low of $1.31, before quickly rebounding to close the day at $2.42.  Volume came in at just under twenty million shares traded for the day, with most of that coming during the last hour of trading. 

Does anyone out there believe that this move was a coincidence? 

I don't think so.

In that move to the downside, someone - or a group of someones - were able to cover their short positions, pick up a whole bunch of cheap shares and take out a bunch of stop-loss orders before the news hit the wires.

It's situations like this one that remind us why using stop-loss orders in the speculative market can be dangerous, because when the big boys want your shares, it's not too hard for them to move the stock down to your stop-loss price and take them away.

I'm not convinced that there won't be any more games played with the AVNR stock before Nuedexta hits the market, but since the product is a first-line (and only FDA approved product) for its treatment indication, the growth story should move fairly quickly and it'll be worth buying this one on any dips.

Congratulations to the patient longs of this stock, and for those out there who still say that price manipulation is a myth - just have a look at Friday's AVNR chart;  the big boys will play when they want to play. 

Congrats again, AVNR shareholders.  No longer speculative, this will be a growth story moving forward.
Disclosure:  No position

1 comment:

  1. I always thought claims of manipulation were mostly the imagination of miffed message board fools. However, I have watched Avanir closely over the last 2 years and saw the evidence for myself. Friday's bear raid was only a confirmation of a very clear pattern. In the future I will always be on the look out when investing in these low cap high volatility stocks.

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