Time To Take Profits On This Scorcher

| November 12, 2009 | 0 Comments

This past July I wrote an article about the amazing profits Penny Stock Breakouts subscribers banked on Human Genome Sciences (HGSI).  In the article, “Can You Really Triple Your Money In Just One Day?” I shared all the details of this incredible story.

Yes, I made sure to tell you about the one day gain of 334%.  And the fivefold return in just two weeks.

However, I wasn’t sharing this story just to brag about a successful trade.  I wanted to show you a real life example of the huge profits you can make trading penny stocks.

But, that’s not all…

I also wanted to let you in on a terrific trading opportunity.

Hopefully you took my advice in July and picked up a few shares of HGSI.  If you did, you’ve now doubled your money in a little over three months time!

What’s behind the recent surge?

Last week, HGSI reported the results of an important clinical trial for their experimental lupus drug—BENLYSTA.  This was the second of two late stage trials required by the FDA.

The results from the first of these two trials sent HGSI soaring back in July.  They showed nearly 58% of lupus patients who took BENLYSTA had improvement in their symptoms.

Despite these terrific results, the future of BENLYSTA still hinged on the results of this last trial.  If the drug failed, HGSI would have had to go back to the drawing board.  And, you better believe the stock would have plunged.

Fortunately, the results were good.

They showed BENLYSTA eased symptoms in more than 43% of lupus patients who took the drug.  That’s significantly better than the existing treatment.  Only 33% of patients who took the existing treatment showed improvement.

BENLYSTA is now one step closer to becoming the first new drug for lupus in 50 years.  This is a great relief for the 5 million people worldwide suffering from this horrible disease.

Now, you may have noticed the results of the second trial were not quite as good as the first.  I don’t think this is anything to worry about.  The difference in results shouldn’t prevent the drug from gaining FDA approval.

According to HGSI, there are two reasons to explain the discrepancy.

One reason is the two trials involved patients from different geographies.  The other is the patients received different levels of background therapy.

The bottom line is BENLYSTA improves lupus symptoms.

Investors are more than satisfied with the results.  They sent HGSI up 35% on the news.  And, they’re continuing to drive the shares higher and higher.

Management’s confident in the results as well.

They’re going to apply for FDA approval in early 2010.  And, they believe it’s possible the drug could be on the market before the end of next year!

This is fantastic news for shareholders.

You see BENLYSTA is poised to be the company’s first blockbuster drug.  That’s no small potatoes.  Blockbuster drugs by definition generate $1 billion or more a year in revenue.

The quicker BENLYSTA is approved, the quicker HGSI can start raking in the dough.  And, it looks like there will be quite a lot of dough!

BENLYSTA is estimated to cost anywhere from $15,000 to $30,000 per patient per year.  The patient population HGSI will be targeting in the U.S. numbers about 200,000.

A bit of simple math and you can see how BENLYSTA could generate annual revenue of $3 billion to $6 billion.  Not bad considering HGSI’s market cap is about $4.7 billion.

It’s no surprise the shares are skyrocketing.

But, there’s more to the story.

HGSI has an agreement with pharmaceutical giant GlaxoSmithKline (GSK).  The agreement says the two companies will share development costs for BENLYSTA and any potential profits.

However, GSK may decide it wants BENLYSTA entirely for itself.

In that case, GSK would buy HGSI outright.  Any potential takeover would be great for shareholders as GSK would probably pay a hefty premium for HGSI.

What to do now?

Doubling your money on a stock in three months is a fantastic return.  Lock in some profits by selling half your position now.  But, hang on to the other half to participate in any further upside.

 

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Category: Penny Stocks

About the Author ()

Robert Morris is the editor of Penny Stock All-Stars, an investment advisory focused on discovering small-cap and micro-cap stocks that are destined to become the market’s next Blue Chips. The Wall Street veteran and small-cap stock specialist is also a regular contributor to Penny Stock Research. Every week, Robert shares his thoughts with our readers on a variety of penny stock-related topics. In addition to Penny Stock Research, Robert also writes frequently for two other free financial e-letters, ETF Trading Research and the Dynamic Wealth Report. He’s also the editor of two highly successful and popular investment advisories, Biotech SuperTrader and China Stock Insider.

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