We recently started a series called “Penny Stock of the Day”. These ideas are geared for traders with an extremely high risk appetite.
Our Penny Stock of the Day is chosen by screening for stocks under $5 and then applying technical analysis on the shortlisted set of penny stocks showing unusual volume. When making these trades, please make sure to pay vigilant attention to pricing moves and have a strict stop loss in place to avoid significant losses.
Penny Stock of the Day: Matinas BioPharma Holdings Inc. (NYSE: MTNB)
Today’s penny stock pick is the clinical-stage biopharmaceutical company, Matinas BioPharma Holdings Inc. (NYSE: MTNB).
Matinas BioPharma Holdings Inc. focuses on the discovery and development of various product candidates. It develops products using its lipid nano-crystal (LNC) platform technology.
The company’s LNC delivery technology platform utilizes lipid nano-crystals for the delivery of small molecules, nucleic acids, gene therapies, vaccines, proteins, and peptides. Its lead product candidate is LYPDISO for the treatment of cardiovascular and metabolic conditions. The company also offers MAT2203. currently in Phase II clinical trials for the prevention of invasive fungal infections due to immunosuppressive therapy in patients.
In addition, it provides MAT2501, which has completed Phase I clinical trials to treat various types of multidrug-resistant bacteria, including non-tuberculous mycobacterium infections, as well as various multidrug-resistant gram negative and intracellular bacterial infections.
Matinas BioPharma Holdings, Inc. has a research collaboration with the National Institute of Neurological Disorders and Stroke (NINDS) for the development of a novel therapy for the treatment of HIV, as well as with ViiV Healthcare to develop and evaluate formulations of antiviral drug candidates; and a feasibility collaboration with Genentech, Inc. for the development of oral formulations.
Website: www.matinasbiopharma.com
Latest 10-k report: https://sec.report/Document/0001493152-21-006979/
Analyst Consensus: Based on 4 Wall Street analysts offering 12-month price targets for MTNB in the last 3 months, the stock has an average price target of $2.48 and an average rating of ‘Strong Buy’. The average price target is a 136.19% upside from the last close.
Source: TipRanks.com
Recent Analyst Ratings | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The Positive Data in the Ongoing EnACT Trial of MAT2203 (Oral Amphotericin B) for the Treatment of Cryptococcal Meningitis, Exceeding the Prespecified Primary Endpoint Threshold. This is also great data for the LNC platform as a drug delivery platform. If MAT 2203 is successful, it would be a safe, oral treatment option in the antifungal space. Currently, nearly 80% of patients on IV Amphotericin B-the gold standard antifungal treatment- are rumored to develop either infusion-related or renal toxicity.
- Anticipation that MTNB’s LNC oral formulations of Gilead’s Remdesivir would show greater or relatively similar efficacy to Moderna’s and Pfizer’s vaccine 4Q21 and beyond, which could potentially catapult the stock to be worth nearly $35-$40 Billion.
- Other upcoming catalysts including the commencement of MAT 2501 P1 study (4Q21), third Cohort MAT 2203 DSMB evaluation and readout (4Q21), and collaboration updates.
- Rumors that the company is a potential buyout candidate by multiple big pharma.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Breakout From Consolidation Area: The daily chart shows that the stock has broken out of a consolidation area, which is shown as a pink color rectangle. This is a possible bullish indication.
MTNB – Daily Chart
#2 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line and the ADX lines are above the -DI line, and the ADX line has currently started to move higher from below the +DI and -DI lines.
#3 Price above MAs: The stock is currently above both 50-day as well as 200-day SMA, indicating that the bulls have currently gained control.
#4 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
#6 Above Support Area: The weekly chart shows that the stock is currently trading above a strong support area, which is marked as a purple color dotted line. This is a possible bullish indication.
MTNB – Weekly Chart
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#8 Bullish MACD: The weekly chart also shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for MTNB is above the price of $1.12.
Target Prices: Our first target is $1.50. If it closes above that level, the second target price is $2.40.
Stop Loss: To limit risk, place a stop loss at $0.88. Note that the stop loss is on a closing basis.
Our target potential upside is 34% to 123%.
For a risk of $0.24, our first target reward is $0.38, and the second target reward is $1.38. This is a nearly 1:2 and 1:6 risk-reward trade.
In other words, this trade offers 2x to 6x more potential upside than downside.
Potential Risks / Red Flags:
- The company has incurred significant losses since its inception. The net loss was $22.4 million and $17.4 million for the years ended December 31, 2020, and 2019, respectively. As of December 31, 2020, MTNB had an accumulated deficit of $107.5 million.
MTNB – Consolidated Statements of Operations and Comprehensive Loss
- The company insiders are not purchasing the stock despite the good news. In fact, there has been no significant insider buying since at least the past year.
- The company has been reporting losses year after year. Yet, the compensation for company executives nearly doubled year-over-year.
MTNB – Executive Compensation
As you can see, today’s featured penny stock offers big upside potential… but it also comes with a number of risks and red flags. As always, when dealing with penny stocks, we advise caution before entering into such high-risk ventures. Remember to think before you trade… understand the risks… and if you decide to trade, stick to your stop-losses!
Happy Trading!
— Trades of the Day Research Team
READ BEFORE TRADING PENNY STOCKS: The allure of penny stocks lies in their potential to deliver massive gains in a short period of time. However, in exchange for that opportunity, most penny stocks carry tremendous risk. They can be extremely volatile and are susceptible to “pump and dump” schemes and fraud.
Unlike regular stocks, the financial condition of most penny stock companies can be extremely difficult to analyze, as the majority of such stocks are traded on over-the-counter (OTC) exchanges, which are typically less transparent and less regulated than the major exchanges. In fact, in the penny stock space, it’s often easier to spot warning signs and red flags than it is to identify a sound investment. Nevertheless, we do our best to identify short-term trade opportunities in this exciting space because we know some of our readers are looking for high-risk, high-reward ideas. We just urge you to make sure you fully understand the risks before making any of these trades.
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