IsoRay (ISR) Jumps on Mysterious Buying Action

Joel Anderson |

Shares in volatile small-cap IsoRay (ISR) took off soon after the opening bell, exploding to as high as $2.82 a share before retreating to about $2.50 a share for gains of about 9 percent.

There doesn’t appear to be a specific news item driving the huge upswing in the stock, and it’s also notable that IsoRay’s gains on Tuesday didn’t come via a gap up at the opening bell. In fact, the stock opened up just $0.02 a share at $2.36, a gain of just under 1 percent, then quickly retreated to its opening price.

The real action for IsoRay didn’t kick in until 15 minutes into the trading day, when the stock suddenly took off on a dramatic spike in volume. The small-cap stock rapidly rose, briefly peaked just before 10 am ET at about $2.65 a share, fell back for about five minutes, then surged again to its intraday high of $2.82 a share.

The peak came at just 10:12 am ET, meaning that heavy trading action was all in that first hour. Over the course of the rest of the day, the stock moved in fits and starts but declined as the day wore on, ultimately giving back a significant portion of its initial pop.

But what was driving this huge buying spree that lasted for less than a half hour?

For starters, it should be clear that the initial buying spree was boosted by momentum buyers pouring into the stock as volume significantly kicks up after a few minutes of buying. However, there aren’t any clear technical signals pointing to a buy signal for traders aside from the stock pushing past its 20-day SMA from below.

So, while the spike appears to have been boosted by momentum buyers, it’s unclear precisely what started it. It might have the look of a short squeeze, but IsoRay’s short float is just over 8 percent and it doesn’t appear that short-sellers abandoning their positions was driving the gains.

However, one potential source of the spike could be anticipation of the release of results from a study testing the company’s novel cesium-131 brachytherapy on patients suffering from early (Stage I) non-small cell lung cancer. From clinicaltrials.gov:

“For patients diagnosed with early (Stage I) non-small cell lung cancer, a lobe of lung is usually removed at surgery to treat the cancer. For some patients, the removal of a lobe of lung may leave too little lung behind for easy breathing. For some of these patients, it may be possible to perform a smaller-scale surgery ("sub-lobar resection") and place a radioactive implant behind to prevent the cancer from growing back. This study will see how these patients do in terms of controlling their disease treated with a radioactive implant called Cesium-131.”

The four-year study’s results are due for release this month and should be greatly anticipated by any IsoRay watchers as a positive result could mean another big spike for the stock. It seems entirely possible that a rumor regarding the outcome of this study could have sparked the initial run on the stock. Certainly, the way enthusiasm spiked early and waned as the day went on would seem to indicate that the buying wasn’t necessarily driven by a verifiable shift in the strength of the outlook for the stock.

IsoRay’s already been on a wild ride this year, and it recently saw shares jump following publication of a peer-reviewed study showing successful results for its cesium-131 treatment when applied to gynecological cancer.

Brachytherapy is a method of radiation treatment for cancer patients that involves implanting “seeds” of radioactive isotopes to focus radiation specifically on the cancer cells. IsoRay’s use of cesium-131 is a novel therapy for which IsoRay holds a monopoly in the market, making any indication that the treatment could be applied successfully in the future big news for the company’s stock.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
ISR IsoRay Inc. 0.56 -0.03 -5.08 192,600
HRTPY Petro Rio SA GDR (Sponsored) (New) 2.23 -0.17 -7.28 7,300

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