Sunday, February 20, 2011

IMUC: Worth Buying on the Retreat?

IMUC: Immunocellular Therapeutics has traded significantly higher to open the new year of 2011, touching an intra-day high of $2.29 before retreating back down to under the $2 mark, where it closed last week at $1.92.

This is a company whose stock has long been on my radar as a potential 'next Dendreon' play, but I haven't yet bought in because of the relatively early stages of the Immunocellular pipeline.

Every few months, however, I'll receive an email or a reader comment regarding the company, and I offer the same opinion each time - loaded with potential, but the products are still a long way off from seeing the light of market, let alone a review by the FDA.

The most advanced product in the pipeline, ICT-107, has just entered the Phase II trial stage (for the treatment of glioblastoma multiforme (GBM), while everything else is still in very early stages of trial or still preclinical. For that reason, Immunotherapeutics is still a highly speculative and very unproven company.

Thanks to Dendreon (DNDN) we are all aware of the skyrocketing share price of companies who announced positive news or trial results regarding cancer immunotherapy treatments, but it's still far too early to compare this company to Dendreon.

Additionally, because of the early stages of development, the prospect of dilution is going to loom as an all-too-real eventuality, unless a deep-pocketed partner comes on board to fund the advancement of the pipeline.

Being that the company had roughly five million dollars on hand at the conclusion of 2010, my bet would be on dilution later this year.

If IMUC is on your watch list, then that might be the time to buy.

If your game is long term accumulation in anticipation of mid to late stage trial results, then there's no reason to not add a few shares here and there along the way, but I'm always a big fan of taking some money off the table into significant price runs.

That being said, I think that the run to over $2.20 was a significant enough one to sell a few shares into - and with that, I believe we'll see the low $1 range again before this retracement is settled.

Now on the back side of a nice run, IMUC is one to watch right now, because the 'buy back in' time may be quickly approaching.

Keep in mind that this is a stock with a long term outlook - there may be some spikes and dives over the next couple of years, but the Phase II for ICT-107 has only just begun.

If that trial is positive, however, then IMUC should see a nice spike before the Phase III.

Disclosure: No position.

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