|Sunesis Pharma's Impressive Gain: Hoping for a Dip|
|By Vinny Cassano|
|Friday, 11 December 2009 07:31|
Shares of Sunesis Pharmaceuticals, Inc.(NASDAQ:SNSS) rallied Thursday on an impressive run that saw the stock reach an intra-day high of $1.84, a full 131% price increase from the open.Earlier in the week, SNSS moved higher on news that the company's lead drug Voreloxin had proved a success in a recently completed Phase II trial that measured its effectiveness in the treatment of Acute Myeloid Leukemia [AML]. However, Thursday's big run has led to speculation that additional news may be pending; maybe partnership news.
That being said, those that have held this stock from or near its 52-week lows should reward themselves for a very successful investment and sell some shares into the spike, because chances are that the stock will retreat somewhat after such an impressive run, assuming that immediate additional news is not pending.
I still like SNSS as a great long term addition to the portfolio, but that is not to say that an investor should ignore the impressive short term gains and flip a few shares as insurance towards the long term investment.
My entry / exit strategy for SNSS revolved around trading the pending Phase II news, so I stuck to my plan and sold half of my position at just over a buck and the other half at just under a buck thirty, meaning I missed out on some additional gains. However, in my opinion, you can't complain about the profits that were to be had with the gains that SNSS realized over the past couple of weeks.
With the trade play over, I'll look for any dip to start a new position with SNSS in my long term portfolio, and I think a dip may be possible after a run like Thursday.
That being said, the market cap of just under 50 million tells me that the stock could still double in short time, so I'll be looking to get back in quick on any dips.
Another factor to consider is that a stock offering is almost a guarantee sometime soon; after all, the company still needs to fund the Phase III trials. The time to buy back in may be after an offering is announced.
Disclosure: No Positions
Vinny Cassano authors the popular stock investing web site VFC's Stock House.