A stock that gaps up is not uncommon.
Hey wait…what’s a gap up?
Think of when a stock jumps up in price in a big leap.
It can occur when the company surprises the market and investors rush to revalue it.
A stock might be, say, $6.
After a gap up, it could be $6.50.
That’s with no trades at prices between the two figures.
Of course, not all gaps go up in your favour. A stock can gap down on bad news, too.
But investors of biotechnology company Kazia Therapeutics Limited [ASX:KZA] are pretty happy right now.
The market priced the Kazia share price 65.91% higher yesterday.
Is now a time to buy Kazia Therapeutics?
Let’s find out. But first…
Who is Kazia Therapeutics Limited?
Simply, Kaizia Therapeutics is an oncology company in the biotech sector.
The company operates to prevent, diagnose and treat cancer.
It develops anti-cancer drugs based on proprietary technology.
On 21 November the company requested a voluntary trading halt.
This can occur when the company is about to release new and price sensitive information to the market.
Kazia issued a market update for a Phase II study of theirs on 25 November.
Let’s take a closer look at the announcement…
Why did KZA open 54% higher?
Kazia informed investors of their interim data for its ongoing Phase II study.
This study was for GDC-0084 in glioblastoma.
This is a common and aggressive form of brain cancer.
The study confirmed that GDC-0084 may delay the progression of glioblastoma.
This is why investors were excited.
Take a look at the chart below…and that gap up I mentioned earlier.
As you can see, the market gapped up at the open and the Kazia share price traded higher for the day.
But now probably isn’t the best time to be buying Kazia shares.
The reason for that is simple, as a trader an adage I live by is this: ‘If it’s in the news, it’s in the price.’
You had to position for the release of this news before the announcement. The risk with this strategy is the release was bad. You could easily cop a hiding on that outcome.
Biotech stocks aren’t for the faint of heart.
This is also only a Phase II trial. And the trial has only been calculated on the first nine patients. That’s not much. Even the CEO says they can’t yet calculate any definite survival improvement. It’s too early.
It’s hard to get an idea if this is going to be a longer term move up or not.
I wouldn’t be chasing the story now. But keep an eye on it if you’re an aggressive investor.
As always, this is not a recommendation to buy or sell KZA. It is an update only. I hope you found it useful.
Until next time,