The Morning Trade

A drug candidate for stomach cancer turns up positive results - and stock gains.
CapitalWatch StaffNov 11,2020,16:55

It’s a prime morning for these two medical stocks: Five Prime Therapeutics Inc. (Nasdaq: FPRX) and its partner Zai Lab Ltd. (Nasdaq: ZLAB) are up 214% and 13%, respectively.

One small-cap and one $8-billion cap to consider for a morning trade.

Successful Early Trial Results

Five Prime’s shares were at $16.75 apiece early Wednesday, that’s $11.41 above yesterday’s closing price. The California-based biotech enjoyed a surge in trading volume after reporting late Tuesday that its Phase 2 trial of a treatment for gastric cancer met all three of its efficacy endpoints.

"These results bring us one step closer to the first potential targeted therapy for advanced gastric cancer in over a decade," Five Prime’s chief medical officer, Helen Collins, said in the report.

In pre-market trading, FPRX surged as high as 360%.

Chinese Partner an Ambitious Fast-Grown Stock

Five Prime’s treatment, bemarituzumab, is also developed in China through Shanghai-based Zai Lab. Controlled by ambitious leader Samantha Du, Zai Lab owns an exclusive license to develop and commercialize bemarituzumab in Greater China. China’s Phase 2 trial of the drug is a collaboration of the two biotech firms.

The drug has yet to gain approval in the United States or China. But, if the trial concludes successfully, it presents significant market opportunities as gastric cancer is one of the most common types of cancers that may result in death.

Further, according to a joint statement released by the companies, bemarituzumab may find uses beyond gastric and gastroesophageal junction (GEJ) cancer.

Zai Lab was trading at $97.70 per American depositary share – also over $11 up from Tuesday’s close. Since early January, this stock is up 145%.

Buy or Not?

Well, it certainly would have been better if you had a magic wand and bought yesterday. While Five Prime is primed for success, I'd wait to see what happens by the end of the day before picking it up. As for Zai Lab, this stock is a bit safer at these prices. Look to pick it up towards the end of day if it falls a bit as the exhuberance settles.

Topics:zai lab, five prime, gastric cancer, oncologoy, bemarituzumab