IPOs Join the Bull
Transcript of BioCentury This Week TV Episode 147
Craig Johnson, Technical Analyst, Piper Jaffray
Kenneth Moch, President and CEO, Chimerix Inc. (NASDAQ:CMRX), Durham, N.C.
Eric Roberts, Investor, Balanced Life Sciences
Jamie Streator, Investment Banker, Cowen
PRODUCTS, COMPANIES, INSTITUTIONS AND PEOPLE MENTIONED
Amgen Inc. (NASDAQ:AMGN), Thousand Oaks, Calif.
Biogen Idec Inc. (NASDAQ:BIIB), Weston, Mass.
Cempra Inc. (NASDAQ:CEMP), Chapel Hill, N.C.
NPS Pharmaceuticals Inc. (NASDAQ:NPSP), Bedminster, N.J.
Onyx Pharmaceuticals Inc. (NASDAQ:ONXX), South San Francisco, Calif.
ViroPharma Inc. (NASDAQ:VPHM), Exton, Pa.
Eric Pierce, Publisher
ERIC PIERCE: What's driving the biotech bull market? Has Washington helped? And how long will it last? I'm Eric Pierce, welcome to BioCentury This Week.
NARRATOR: Your trusted source for biotechnology information and analysis, BioCentury This Week.
ERIC PIERCE: The biotech industry is now 52 months into its bull run on Wall Street, more than four years, and is reaching levels not seen since the genomics bubble in 2000. Biotechs have raised another $17 billion so far this year, but the real news is that cash-starved venture companies have finally joined the party. Biotechs have raised more than a billion and a half dollars in IPOs this year, making 2013 the best market for new issues in a decade. What's driving the interest in IPOs? Some point to the JOBS Act, which Congress passed in 2012 to provide private companies better access to Wall Street. Others say the red hot biotech market has generated lots of profits for investors who are happy to redeploy their cash in fresh opportunities. But market watchers know the party can't last forever.
Later in the show, Piper Jaffray technical analyst Craig Johnson will show us what his charts are saying about biotech stocks in the second half. Now, I'm pleased to be joined by Kenneth Moch, President and CEO of Chimerix, an anti-viral company that raised more than $100 million dollars in its April IPO. We're also joined by investor Eric Roberts of Balanced Life Sciences, and investment banker Jamie Streator of Cowen and Company. Jamie, I'd like to start with you. You've been in the banking industry for 30-plus years. How has the JOBS Act impacted how you go about selling IPOs?
JAMIE STREATOR: It's been actually pretty fundamental and it really comes down to marketing. In the prior era we really had to take companies public by essentially introducing the public in a very short time frame, which is defined by the rules. Under the JOBS Act, we're now allowed to actually go visit with the investors, people like Eric, and introduce them to the companies weeks or even months before that process starts. And educating the consumer is a big part of how we've done it. And Eric probably has a perspective on that as well.
ERIC PIERCE: Eric, what's your take?
ERIC ROBERTS: Biotechnology is obviously a very complicated space. It's probably the most complicated of any investment. If you're looking at investing in a company, especially a new company like in an IPO, you need time to make a decision. The JOBS Act allows investors to get a running start. There's meetings called Test the Waters meetings where investors can look at a company well before the official road show, where they can take meetings two months maybe before an IPO pricing, and spend the next two months doing work, talking to their experts and preparing for the actual pricing date. And then they become sophisticated investors who want to own a stock for the long haul, not making a quick decision because a deal's pricing in a week and they have to buy it quickly.
ERIC PIERCE: So it's really introduced a fundamental change on how companies can get marketed to investors. Because prior to that there was a quiet period where you basically filed for an IPO, you sort of fell into this quiet period where you really couldn't say a whole lot or have discussions with investors. Ken, talk about your experience, your April IPO and how many Test the Waters meetings did you do, and how did they help?
KENNETH MOCH: Well, we did literally dozens of Testing the Waters meetings. I'd add one thing to what both Jamie and Eric said, and that is it's not only the potential to educate investors, it's actually learning if there's an interest in the company. So when we started thinking about our IPO a year or so ago, the Testing the Waters meetings allowed us to see that there was, indeed, investor interest in Chimerix, which would then allow us to convince the bankers that this was a good thing to do. The market really wasn't there yet. And so that helped us to make the decision to invest in an IPO pathway, which is costly, and then made us comfortable that we had the potential to complete the IPO.
JAMIE STREATOR: And Congress, I think, should take credit here. Because at the end of the day, the old rules, really under the gun jumping sort of concept, you were precluded from actively approaching investors without a prospectus in place and without the clear regulatory path with the SEC. This has enabled us to really effectively position these companies and frankly have a two-way conversation with the buy side, which wasn't possible before. Where we can talk about combinations of pricing, the quality of the science, the quality of the management, timing wise, are they ready for the public markets yet or are they too early? And I think that's going to, I think, fundamentally change the way we both approach investors going forward and continue to do that, but also allow us, I think, to better gauge when to actually take companies public. And that will make it a much more, I think, constructive process for the companies, as Ken said, from a timing point of view.
ERIC PIERCE: So it's really facilitated a dialogue or a conversation, if you will.
KENNETH MOCH: Absolutely. And the quiet period, Jamie referred to this. The quiet period made no sense for technical companies like ours. You need the time to understand what the story is, to see if it's really of interest. And you can't make a decision on have a meeting Tuesday, invest on Wednesday. It does not work.
ERIC ROBERTS: I think we were all testing the waters over the last year to see if this would work. And I think we all had some skepticism, but I think all the studies that have been done in recent months about the JOBS Act and its impact have said the Test the Waters meetings were a key part of the success of that act.
ERIC PIERCE: What's interesting, Jamie brought it up earlier, is the cost side. And if you go back to Sarbanes-Oxley, when that was enacted, effectively that raised the bar for companies to the regulations around which and costs around which to go public. And so now with the JOBS Act sort of a year or two under its belt, is the sheen kind of coming back on being a public company? Because for a long time companies said well, we're going to remain private as long as we can.
KENNETH MOCH: I'd say it differently. It's not as difficult to get public if the markets are interested in you being public. It's two sides of the equation. But the JOBS Act, clearly with the removal of the 404(b) auditor attestation before the IPO, getting ready for that was a significant change bcause that was basically a wealth transfer from research and development to accounting to get ready for something that might not happen. And so from an investor perspective, our investors or investors in any venture capital-backed company would look at that investment prior to going public and say does it make sense to take that risk?
ERIC PIERCE: We've got about a minute left, so we just want to get Eric and Jamie's feedback. In terms of the meetings that you're seeing, how helpful is that for you and your team in terms of identifying and understanding whether this company is an investable name?
ERIC ROBERTS: Oh, incredibly helpful. We don't make decisions on a company unless we've spent weeks, if not months making decisions. And under the new environment, the new rules, we have that time.
JAMIE STREATOR: I think for the first time we actually are partners with the investors. I think the old system was almost confrontational, because you're sort of asking them to make a decision on imperfect information. Now it's back and forth and if there's a gap in the information we help fill that gap. And I think that in any marketplace the more transparent it is and the more flow of information is allowed between intermediaries on both sides of the equation, you're going to have a more efficient market structure. And I think that's really what's emerging.
ERIC PIERCE: That's great. Excellent. Well, $9 billion has poured into healthcare investment funds in the first half of this year, but May and June were a much different story. Here are the numbers. We'll be right back to analyze what they mean.
NARRATOR: You're watching BioCentury This Week.
ERIC PIERCE: What's needed to maintain the market's momentum? To find out what could help or hurt we're talking with Ken Mock, Eric Roberts and Jamie Streator. Eric, we ended the last segment with a picture of healthcare fund flows clearly tapering off after a strong start to the year. How much of a concern is that for you?
ERIC ROBERTS: It's not a big concern. I think the biotech industry is a much more mature industry than it used to be when we all used to worry about fund flows in the '90s and the 2000's when biotech was a very immature industry. There are over 900 products in Phase III trials in the biotech industry today. It's an industry that stands on its merits. It's producing drugs, getting more drugs approved and is evaluated based on its fundamentals. It's a profitable industry in aggregate, and I think investors don't flock to the industry based on hype and run from it based on fear. And investors have made money in the last year. It's been the number one performing sector in the S&P 500 in the last year. So investors see the maturity of the biotech industry and the value creation from these drugs in late-stage trials.
ERIC PIERCE: So maturation of the industry is helping out. Performance is helping out. Jamie, how are we doing?
JAMIE STREATOR: Performance is effectively chumming the water. So performance is drawing in the investors who weren't sufficiently allocated to healthcare before. Because the way the investor community is paid is on a relative basis. If you do better than your peers, you get compensated for it. And when healthcare is doing better, the generalists, as we call them, begin to gravitate into health care. And that's part of what's been driving the deal cycle recently for IPOs.
ERIC PIERCE: And how much under-invested were people coming into this latest cycle?
JAMIE STREATOR: That I wouldn't know off the top of my head. Substantially.
ERIC ROBERTS: As Jamie said, the generalists were not in healthcare. In fact, there was a taboo to be in healthcare and life sciences in most of the last decade since the bursting of the genomics bubble. And those folks have certainly come back, right? You've seen it in your deals.
JAMIE STREATOR: Yeah, so I think the combination of being under-invested plus the absolute performance of the deals has been quite positive. And again, that's another way of kind of gauging your metric relative to your peers. Because the performance of the deals has increased people's relative performance if they were invested in those deals, not just in the sector, and so the generalists have said we have to now play in these IPOs. And so most of the successful IPOs that have occurred have had a much, much larger component of what we would call generalist investors. So it's not just the Fidelity Select Biotech fund, but it's also three or four other pools of capital at Fidelity that are now also investing in the IPOs.
ERIC PIERCE: Ken, what was your experience with the IPO? I know you work with Jamie on that and you guys are one of the more successful aftermarket performing IPOs. What was your experience? Were you seeing new names that you typically -- how did you guys sort of build that syndicate?
KENNETH MOCH: We did see some new names. We saw a lot of people who had been on the sidelines, but were the old names just waiting for a time, and I think that that went very well. Our process happened to be a very good process that I think the bankers played a role, Testing the Waters played a role, the support of the general community played a role. And, of course, having a good story is the key thing. I think we lose sight sometimes of the fact that our goal is to save lives and to develop new medicines that do that. I think that that story resonates and the ability to have good performing companies with a clear pathway for development of their compounds is really important.
ERIC PIERCE: Certainly it's easy to look past that social aspect.
KENNETH MOCH: Right, it's a huge component.
ERIC PIERCE: And the other thing you mentioned to your investors that resonated was the IPO was not the final funding moment for Chimerix. What did you tell your investors?
KENNETH MOCH: It was a mile post not a destination. I mean, our destination is the approval of our drug, the funding of the Phase III trial we guarantee is the -- if guarantee is the right word -- is going to be the focus of our efforts, and the money has to be sufficient to complete our Phase III trial. That's what people are looking for. You described it as not taking the funding risk. So we need to make sure that the investors don't take that funding risk.
ERIC PIERCE: Are you in a position where you're starting to put more capital into companies so you kind of mitigate that funding risk for the portfolio companies?
ERIC ROBERTS: Yeah, I think the more capital, the better the companies do.
KENNETH MOCH: Market has always rewarded war chests, is a way of looking at it. If you have the capital to get to your next milestone, be it a Phase III trial or some important thing, the market is very comfortable with that. If you have to stop in the middle, they're uncomfortable.
ERIC PIERCE: Let's talk a little bit about the M&A market, because that's another exit opportunity for companies, aside from an IPO. And usually in biotech you either have one or the other. A decent M&A market and a lukewarm IPO market. It seems like this time around we've got sort of the porridge is the right temperature, if you will. Ken, talk a little bit about whether the dual tracking strategy and whether or not that was an opportunity that you guys explored as well.
KENNETH MOCH: I think as a matter of value creation, you have to look at dual tracking. But I think in this particular case, with the markets being able to take your product further by its nature allows you to have greater returns. So for us, when it was clear the IPO market was an approach, that was the best way to go. We can take the drug further, we'll take it through Phase III, we'll get the results. We hope the results are good in terms of saving lives with CMX001 and that will result in greater value creation for our investors.
ERIC PIERCE: Speaking of value creation, Eric, you have an interesting perspective in terms of the pricing tension that's showing up now that the two markets are fairly hot. Talk a little bit about that.
ERIC ROBERTS: Yeah, I think in recent years there wasn't a very strong IPO market for biotech companies and that meant that the pharmaceutical companies that were having a tough time with their R&D productivity -- and we all know about this famous patent cliff in the pharmaceutical companies where a lot of products were going off patent -- were able to kind of have their way with a lot of the private venture capital-backed biotech companies. And that reduced the returns for the venture industry, which was sort of the mainstay of starting a lot of these novel companies and kind of the innovative companies, and reduced the returns for those investors and they were starting less companies.
Now with an attractive and thriving biotech IPO market in the last year, it creates a much better option for these private companies as an alternative to M&A. And you're seeing better valuations across the board in IPOs and M&A, which is a good thing for the industry.
ERIC PIERCE: A lot of the things -- the argument around some of the IPOs that we saw before the market warmed up were that they were club deals. Jamie, I'd love you to talk about this, where you basically had a group of investors that said this company doesn't have many options, so lets --
JAMIE STREATOR: We euphemistically called it the $7 club, because everybody went public at $7, which is not necessarily a reflection of the company's values, but a reflection of the stock splits and ultimately where the thing was priced. But I think that there was no doubt about it that they were, in effect, public private placements. And it was a group of anywhere from a dozen to 18 or so investors who did them over and over again and effectively set price.
ERIC PIERCE: Well, the hot biotech market can't last forever. So when we come back, we'll ask if the industry has raised enough money in this window. For prospective, here's how much biotech has outperformed the market this year.
NARRATOR: Now back to BioCentury This Week.
ERIC PIERCE: We're talking with Ken Moch, Eric Roberts and Jamie Streator about market predictions for the rest of 2013. We started the show with the JOBS Act, and where do you think Congress should be playing in terms of how they can enable better, freer flow of capital?
KENNETH MOCH: Well, I had the opportunity to talk before a Congressional committee about this specific point, and they're looking at a bipartisan nature of what could be done to increase the implementation of the JOBS Act. There are certain aspects of it that are still unclear. They're looking at ways that we can make sure there's further liquidity for small companies, making sure that the IPO process is something that's just more clarified. For example, in Testing the Waters meetings, there's a huge debate that I could see between various lawyers and various bankers, about how much you can do in talking to companies and investors before the IPO and leading up to it. So that's a good question.
JAMIE STREATOR: I would actually say that there is a fairly stiff interpretation certain firms have taken to the number of meetings you can actually do. It actually hasn't been promulgated by Congress yet, and I actually think a very, very high ceiling should be applied to that and basically open the gates. Do as many as you want.
ERIC PIERCE: So there's a gray area where --
JAMIE STREATOR: It's open to interpretation.
ERIC PIERCE: It's not clear how many meetings you can have.
KENNETH MOCH: And the theme was getting the SEC to clarify the rules and regulations, or at least provide a greater set of structures. Because right now it's open to significant interpretation and some people are very conservative, some are less conservative. There's issues of making sure everything's implemented fully.
ERIC PIERCE: Eric, we talked earlier about performance and obviously that's something that can keep the market going in addition to some of the regulatory means that are put into work. What are some events on your calendar that you're keeping an eye on?
ERIC ROBERTS: I think certainly M&A activities are a big part of it. This recent hostile bid by Amgen for Onyx, I think it's the seventh hostile bid we've seen in the last three years by pharma and big biotech companies for smaller biotech companies. That shows that the thirst for pipeline products within the large pharmaceutical and biotech community from small biotech. That drives stocks, it drives investments, it drives new capital into the sector. And I think that's keeping the excitement going. And then there are the deals, the IPOs that have made people so much money in the last year, which I think Jamie can talk about a little bit.
JAMIE STREATOR: Yeah, so IPOs, as a class, are up well over 50%. That's been unprecedented over the last 15 years or more. And I think that speaks to the quality of the companies, I think to the depth and I think breadth of the investor community that's actually participated in those deals. And I think what's actually very interesting to us as bankers is the pipeline of companies that we see coming is as good or better than the companies that have already gone public. This is a very mature group of companies. And I think that will by dint of the quality and maturity of the science in those companies help sustain the quality of the deal flow and the performance.
ERIC PIERCE: We've got about 30 seconds. What's making the quality higher? This time around opposed to the last window?
JAMIE STREATOR: Well, I think actually the market's discriminating, so some deals are not getting done. And that's important to keep in mind. Some companies have not been ascribed the same values as others. Candidly, I think some of us who have been through these cycles before are being a little more judicious about what we're willing to take on, and I think that speaks to the fact that we're being disciplined about the companies we're taking to the market. And I think the market should act as a natural barrier there in keeping up the quality bar, and that's very important. I think lowering the quality bar will not be a positive element for equating.
ERIC PIERCE: Excellent. Great. Well, thanks to our panel. So what do the charts say about the biotech market in the second half? Piper Jaffray's Craig Johnson will give us his perspective. But first, here's a look at how Piper's Big Cap Index has performed.
ERIC PIERCE: To offer an analytical perspective on what's ahead, we're once again joined by Piper Jaffray technical analyst Craig Johnson. Craig, welcome back.
CRAIG JOHNSON: Thanks, Eric. Thanks for having me.
ERIC PIERCE: Well, I want to start with a bigger picture. We talked earlier in the show about how biotech was outperforming. Let's take a look at what your analysis is on the S&P 500.
CRAIG JOHNSON: Sure. So the S&P 500 is up a little over 14% this year. It's been quite an amazing ride so far this year. A lot of investors are still not very confident that this market can continue in here. But from the bigger term pictures and what we're seeing, we think it continue to rise into year end.
And what we're seeing on the charts right now is we had a little bit of a pullback that started in the May time frame, tail end of May. And it's just been a pullback and a retest of support. We think this has just been a healthy pullback, Eric, and we still remain positive and been recommended investors to continue to be adding to positions in here.
ERIC PIERCE: Now what's your target on the S&P? Do you have a long term target?
CRAIG JOHNSON: Sure. We laid out three price objectives on the S&P, August of last year. We laid out 1550 in six months, and we laid out 1700 in twelve months. So we're only a few weeks away from hitting that second mile marker that we've been looking for, which is 1700. And then ultimately next year, we're looking for 2000 on the S&P 500.
ERIC PIERCE: OK. Great. Let's jump into the biotechs. We're going to tee up here your Piper Big Cap Index. Now how big are the companies in this index?
CRAIG JOHNSON: Basically, every company in here is going to be large cap. We'll define that kind of --
ERIC PIERCE: $10 billion-plus market cap?
CRAIG JOHNSON: $10 billion-plus market caps.
ERIC PIERCE: What do you see here?
CRAIG JOHNSON: So what we're seeing here with this chart is, this is a group that had been consolidating, really since about 2000. And just recently, I'd say recently in the last 12 to 18 months, this group broke top side of that consolidation range, making all-time new highs.
And we've been seeing good, strong relative strength, and also good price momentum at the very bottom of that chart. So this kind of price action has really been drawing in investors looking to be investing in the biotech space.
And this chart has gotten to be very steep. It's almost gone what we define as parabolic, in the technical world, meaning going straight up. We think that biotechs, specifically the large caps, are probably due for a bit of a pullback and a retest of support where we broke out from.
ERIC PIERCE: So've been good performers of late, maybe a little bit of retrenchment coming up. Let's take a look at what your mid cap chart shows.
CRAIG JOHNSON: Yeah, Eric. This one's a bit more optimistic. We reverse the price down trend that had been in play for this particular group for about the last five to six years. We're seeing good relative performance. It doesn't look extended the way the large caps do.
And perhaps what we're seeing with this is that there's some consolidation premium being put into these mid cap stocks. And we're not seeing quite the steep valuations for these names, and we're not seeing any sort of relative strength weakness and roll over quite yet in the mid cap space.
ERIC PIERCE: So between the big cap and the mid cap, the mid cap chart's looking a little bit more promising for potential upside, just based on the trends.
CRAIG JOHNSON: Absolutely. Definitely. Mid cap looks more attractive right now. And again, the large caps look like they're due for a little bit of profit taking, backing and filling, as we would call it.
ERIC PIERCE: Let's take a look at a couple of select big cap issues. Let's dial up Amgen here. Amgen's the big biotech bell weather. What's this chart showing you, Craig?
CRAIG JOHNSON: Well, no question. Amgen's been on an absolute tear, and it has been, really since the fall of 2011. They've been making a nice series of higher highs and higher lows here on the chart. You can see the blue line there. That's the rising 40-week moving average on a weekly chart. And we've pulled back and retested that a couple times. And really since the end of May, we've been consolidating and pulling back. And we're right now in the process of retesting that up-trend support line and also that rising 40-week moving average.
I'm watching to see if that level holds. If that level doesn't hold, I think you're going to start to see some meaningful profit taking coming in on Amgen. But if it does hold, if we start turning back up, I think you'll see some good flows into the name. So we need to be watching this level very carefully, that 40-week moving average.
ERIC PIERCE: Excellent. I think we have time for one more. Let's dial up Biogen Idec here. What's this chart showing you, Craig?
CRAIG JOHNSON: So again, another great winner. Nice series of higher highs or higher lows on the charts. But you can see over the last year or so, we've gotten a little bit extended. The slope of the Biogen charts really started to steepen, and we're now consolidating.
So from our perspective, if we are going to pull back, you're going to find really good support, which you are starting to see at that rising 40-week moving average. And we're starting to see a bit of this down trend reversal since the May time frame. If we can come back and break top side of those highs, I think people are going to be excited. But right now, we're clearly in a profit-taking mode in some of these names, even though they're still in up trends, Eric.
ERIC PIERCE: Excellent. Well, that's all the time we have. You can see more of Craig Johnson's analysis in our web exclusive interview. It's at BioCenturyTV.com.
Thanks to Ken Mock, Eric Roberts and Jamie Streeter. And remember to share your thoughts about today's show on Twitter. Join the conversation by using hash tag #BioCenturyTV.
For Steve Usdin, I'm Eric Pierce. Thanks for watching.
NARRATOR: Now, a BioCentury This Week Web Exclusive.
ERIC PIERCE: I'm joined again by Craig Johnson from Piper Jaffray. Let's take a look at the bigger picture -- the fund flows. And tell me what you're seeing from those overall perspective.
CRAIG JOHNSON: Sure, from a 10,00-foot perspective, what we're seeing right now is we're finally starting to see inflows back into equity funds. We have not seen meaningful inflows into equity funds in multiple years. And in 2013, we finally started to see inflows back into equity funds.
On the flip side though, interest rates. Interest rates have risen quite steeply over the last eight weeks or so. And we're starting to see some meaningful outflows coming out of fixed income funds. And specifically, to biotech -- the strong performance we've seen in biotech over the last couple years has really had positive inflows into those funds. And you can see those from the charts, very strong inflows.
The question is going to be, going forward from here, can those fund flows continue? Well, given the weakening relative performance that we're seeing on our large cap index, I suspect that those fund flows are probably going to ease, Eric.
ERIC PIERCE: And so, what's interesting is a lot of these smaller cap companies in biotech can be influenced by relatively small pockets of capital. And when we see a shift from, say, money coming out of a large cap portfolio and moving down the line, sometimes the price moves can be pretty dramatic.
CRAIG JOHNSON: Absolutely, and there certainly could be very strong underpinning for all those mid-cap stocks, just a little bit of money and profit-taking coming out of the some of the large cap names could certainly underpin a lot of those mid cap names.
ERIC PIERCE: Well, let's take a look at some of the mid and smaller cap names. The next chart we're going to dial up here is ViroPharma, infectious disease company. What's this chart showing you?
CRAIG JOHNSON: So, Eric, this is a very constructive looking chart. You can see the big base-looking price action here on the chart. And we're above a rising 200-day moving average and also a 50-day moving average.
From a technical perspective, I like these kind of big bases. It tells me the shares are under an accumulation and any sort of move post the highs we've seen over the last 12 months are going to be a real positive top-side breakup for the shares. So, on weakness, bottom line, we would be buying the shares.
ERIC PIERCE: OK. Let's take a look at the next company we got dialed up. Cempra, which is an infectious disease company as well. What is this chart showing you, Craig?
CRAIG JOHNSON: So Cempra recently broke out of a consolidation range it had been in for the better part of about nine months. We moved above the 200-day moving average and the 50-day moving average. And now we're starting, just in the past month or so, consolidate sideways.
But notice the volume there at the bottom of the chart. It's picking up as the shares are consolidating, suggesting that there's perhaps a lot of buy-side interest there in this particular name. So this is, again, a name I would be buying in positions and at these levels.
ERIC PIERCE: So incorporating the volume activity into the price movement as well, is key.
CRAIG JOHNSON: Absolutely.
ERIC PIERCE: Yeah. Yeah. OK, let's take a look at our last chart which is kind of a mid-cap play, NPS Pharma, about a $1.5 billion company.
CRAIG JOHNSON: Yeah, here's a stock that had been consolidating sideways. You'd been forming what we define as a bit of an ascending triangle. You can see the higher lows having gotten put into the shares. You had a pretty flat top on the shares for over the last about 18 to 24 months. And then we finally broke top side of that.
Typically, when stocks break top side of those consolidation ranges, you tend to see the price action accelerate. And that's exactly what you've seen with NPS Pharma. I wouldn't be surprised now given the size of that pattern and the move we've just had, to see some consolidation and profit-taking come into play and pulling back to where the shares broke out from. So we'd be buying these shares on weakness from our perspective.