Please understand that I am offering up an opinion here on a stock that I have, (what I consider to be) a significant position in. I eat my own cooking in other words, but with that being said it is obvious that my opinions are extremely biased.
I typically don't offer up predictions for a stock price, so much can happen. I prefer referring to market capitalization because dilution can come into play, especially with speculative companies like Resverlogix. The reason I'm putting a price target prediction out now on RVX.TO is because of the technical picture, and I actually think $3 by the end of 2016 may prove to be incredibly conservative, and I sincerely hope it is.
RVX.TO is setting up for a golden cross. Strictly speaking a golden cross happens whenever a faster moving average moves over a slower moving one. The 200 DMA moves slower than the 100, the 100 moves slower than the 50 and the 50 moves slower than the 20. So a golden cross can involve the 20 DMA moving over the 50, 100 or 200 DMAs.
But the goldenest (if that's a word) of golden crosses occurs when the 50 DMA crosses over the 200, especially if the 200 DMA is also moving higher when the cross happens. And that's what setting up for RVX.TO right now (and for RVXCF as well). The 50 DMA for RVX.TO is currently at $1.32 and moving higher and the 200 is at $1.39 and has also started to climb slightly.
The last time RVX.TO saw a 50/200 Golden Cross was in March of 2015, and all you have to do is look at the chart to see how the PPS reacted just before and after than technical event.
The difference this time is in the starting point. Back in early 2015 when that Golden Cross was setting up in late January and early February the PPS was less than a single dollar Canadian. Now the PPS is around $1.70 after recently trading over $2. Take note that back in 2015 when RVX ran from less than a dollar to up around $3 that it wasn't a straight line. There were periods where the PPS retraced significantly before resuming the upward climb, just as RVX.TO has seen the past three trading sessions.
The golden cross in 2015 happened prior to the company announcing a licensing and equity agreement with China based Shenzhen Hepalink Pharmaceutical. Resverlogix's CEO reaffirmed that the company will be announcing a second such deal on September 13th just passed. It is my opinion that expectation surrounding this second deal, that it is driving the current move we've seen with RVX.TO climbing off the $1.20 - $1.30 trading range it had been in for the past several months.
Last year's climb to $3 was followed by a slow steady decline. Is there reason to expect, that if it does, once again, get back $3 and perhaps even higher, that it will be followed by another long period of decline? While I think that is certainly possible, I also think things are much different as we head into the end of 2016 and the start of 2017. The biggest difference is in terms of the phase III BETonMACE trial seeking to prove that Apabetalone will reduce the incidence of Major Adverse Cardiac Events (MACE) in patients suffering from Diabetes Mellitus.
Back in March of 2015 the BETonMACE trial was still over 6 months from starting, now heading into October of 2016 that trial has been running almost one full year. And the company just recently received a positive recommendation from the independent Data Safety Monitoring Board for the continuation of the trial.
There are no potential rewards without the potential for big risks. Biotechs are almost akin to firecrackers. They can give off a spectacular bang, such as when a buyout is announced, or they can fizzle, such as when a trial is halted.
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