With a rapidly rising support level converging with a hard ceiling of just over $4 a share, it appeared as though something had to give for small-cap biopharmaceutical company Cell Therapeutics (CTIC) and Monday appeared to be that day of reckoning. Shares fell as much as 21 percent before rebounding sharply, but losses remained over 7.25 percent into the early afternoon.
Cell Therapeutics had developed a resistance level just over $4 in mid-January that was sloping downward slightly, and a sharply rising support level that formed in mid-December was rushing to meet it. The support level had been moving in tandem with the 20-day SMA since late February. This sort of chart pattern would indicate a breakout was coming, and, unfortunately for Cell Therapeutics investors, it appears to have been a negative one.
The stock passed through both its 20-day and 50-day SMA from above during its hard sell-off that bottomed out just after 10:40 am ET.
Without any news items or clear fundamental motivations apparent, it’s possible that the primary factors driving this sell-off were technical. However, also potentially contributing to the drop is a rash of insider sales over the last month, the most notable of which was CEO James A. Bianco’s shedding 395,000 shares at an average price of $3.83 apiece on Friday. However, given that the sale netted just over $1.5 million, it’s hard to view this transaction as moving the needle significantly.
Its been a wild ride for Cell, which had more than tripled in value over the last year prior to Monday’s plunge. The company has been riding high since last fall on the progress of its drug for treating blood disorder myelofibrosis, pacritinib. Cell and the FDA agreed on the design for a 300-patient, 24-week Phase-III study in October.
Pacritinib is a kinase inhibitor that treats patients by affecting mutations caused by myelofibrosis. From the company’s website:
“Pacritinib is an oral, once daily, selective tyrosine kinase inhibitor (TKI) with activity against two important activating mutations: Janus Associated Kinase 2 (JAK2) and FMS-like tyrosine kinase 3 (FLT3). JAK2 is implicated in myeloproliferative neoplasms (MPN), leukemia and lymphoma, while FLT3 is a commonly mutated gene found in patients with acute myeloid leukemia (AML) and lymphoma.”