Arbutus Biopharma Corporation (ABUS)
Current Price: $4.96
Target Price: $15.00
Upside Potential: 202%
Market Cap: $342 million
Shares Outstanding: 69 million
Float: 38 million
Arbutus Biopharma Corporation (ABUS) shot up and Moderna, Inc. (MRNA) tanked this past week after a court ruling went in favor of ABUS and against MRNA for a patent owned by ABUS relating to technology that MRNA uses in its vaccines, including its COVID-19 candidate. There can be only one outcome to this situation and it must happen quick. MRNA must move fast to purchase ABUS. This will result in tremendous upside to ABUS but would also be a positive for MRNA and its shareholders as it demonstrates to the market that it can quickly move past this issue with minimal dilution. We are up to 905 followers despite not giving out a lot of alerts, a fact that we think is indicative of a successful, diligent and prudent stock picking history. If you like our picks you can follow our blog by clicking the follow button on the top of the left hand panel as well as follow our Small Caps, Big Gains blog where we put up our Canadian picks. You can also follow us on Twitter @StockTradePicks which has over 4,500 followers.
MRNA has lost about $3 billion in market cap since the ruling. ABUS' market cap is only $342 million. We expect an offer in the billion dollar range in an all-stock deal which would lead to a $15 per share target on ABUS while diluting MRNA only about 3-4%. This 3-4% would have likely been a percentage royalty owed anyways, so it's better to just buy out the entire company for cheap and skip this process while overcoming the negative market sentiment that this ruling has sparked.
Moderna has stated that the patent ruling did not impact its COVID-19 vaccine development, but the market is clearly skeptical about this claim given the price performance since. This would actually give MRNA more incentive to buy out ABUS and make this problem go away. If MRNA went ahead with its vaccine development as if it thought this was true, ABUS could fight it in court and prove otherwise. This would show that MRNA filed a false news release and the SEC might get involved for manipulation.
In the race for the COVID-19 vaccine, MRNA can ill-afford stalling development or commercialization of the vaccine due to a patent issue. This must go away as quickly as possible and the best case scenario is the buyout. We think the drop in ABUS' stock price on Friday is related to this premise. Had ABUS risen to $12, $15 or beyond, the chances of buying it out for a billion dollars would be next to nil. Now that it's $5, there is a chance the it would be accepted.
ABUS has 69 million shares with a 38 million float. Over 300 million shares traded between Thursday and Friday. So it's very likely that the float would be in new hands that would be interested in seeing a positive outcome ASAP in order to make a return. They would vote yes to any hostile takeover bid attempt by MRNA. The bigger challenge would be the remaining 31 million shares in the hands of management, funds or other investors very close to the company. That means there is an interest in buying up as many shares as possible in the open market to secure a yes vote. Day traders and new Robinhood investors need to be able to stomach the minute-to-minute volatility and hold through it for a big payoff that should not be too long in coming. If nobody sells their shares low, an interested buyer will have to move up their bids on the open market.
ABUS filed a confidential treatment order with the SEC which we find to be very curious timing given the circumstances. CTOs are enacted to try to keep something secret to keep a company's competitive advantage or in talks during M&A deals.
We see arguments in social media between ABUS and MRNA shareholders, trying to trash each other's stock. This makes no sense to us since it's clear based on market reaction that both companies will do better to work together. ABUS and MRNA shareholders should push for a deal so they can BOTH win, like what happens under so many merger scenario. We are long ABUS but may consider going long MRNA too if signs are there that it's willing to make a deal. We believe MRNA can shoot back up to $80+ upon announcing a deal or settlement with ABUS.
Disclosure: We are long ABUS
What's next for microcap stocks? TradeMiner identifies seasonal trends and market cycles, the Penny Stock Prophet and Microcap Millionaires finds the next big small cap plays in various industries while Addicted to Profits makes trades from a Canadian perspective.
There are also some good books available on microcap stocks and day trading such as:
Mastering Microcaps: Strategies, Trends, and Stock Selection (Bloomberg Professional Library)
The Little Black Book of Microcap Investing: Beat the Market with NASDAQ/AMEX Microcap Stocks, OTCBB Penny Stocks, and Pink Sheet Stocks
Microcap Magic: Why The Biggest Returns Are In Stocks You've Never Heard Of
How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology
How to Day Trade: A Detailed Guide to Day Trading Strategies, Risk Management, and Trader Psychology
A Beginner's Guide to Day Trading Online (2nd edition)
Stock Investing for Beginners: Marijuana Stocks
Here are some other good stock market resources. This includes technical analysis and day trading, dividend stock investing, gold and commodities, sector rotation, options trading and microcap trading strategies:
The dividend stock report from dividendstocksonline.com
Current Price: $4.96
Target Price: $15.00
Upside Potential: 202%
Market Cap: $342 million
Shares Outstanding: 69 million
Float: 38 million
Arbutus Biopharma Corporation (ABUS) shot up and Moderna, Inc. (MRNA) tanked this past week after a court ruling went in favor of ABUS and against MRNA for a patent owned by ABUS relating to technology that MRNA uses in its vaccines, including its COVID-19 candidate. There can be only one outcome to this situation and it must happen quick. MRNA must move fast to purchase ABUS. This will result in tremendous upside to ABUS but would also be a positive for MRNA and its shareholders as it demonstrates to the market that it can quickly move past this issue with minimal dilution. We are up to 905 followers despite not giving out a lot of alerts, a fact that we think is indicative of a successful, diligent and prudent stock picking history. If you like our picks you can follow our blog by clicking the follow button on the top of the left hand panel as well as follow our Small Caps, Big Gains blog where we put up our Canadian picks. You can also follow us on Twitter @StockTradePicks which has over 4,500 followers.
MRNA has lost about $3 billion in market cap since the ruling. ABUS' market cap is only $342 million. We expect an offer in the billion dollar range in an all-stock deal which would lead to a $15 per share target on ABUS while diluting MRNA only about 3-4%. This 3-4% would have likely been a percentage royalty owed anyways, so it's better to just buy out the entire company for cheap and skip this process while overcoming the negative market sentiment that this ruling has sparked.
Moderna has stated that the patent ruling did not impact its COVID-19 vaccine development, but the market is clearly skeptical about this claim given the price performance since. This would actually give MRNA more incentive to buy out ABUS and make this problem go away. If MRNA went ahead with its vaccine development as if it thought this was true, ABUS could fight it in court and prove otherwise. This would show that MRNA filed a false news release and the SEC might get involved for manipulation.
In the race for the COVID-19 vaccine, MRNA can ill-afford stalling development or commercialization of the vaccine due to a patent issue. This must go away as quickly as possible and the best case scenario is the buyout. We think the drop in ABUS' stock price on Friday is related to this premise. Had ABUS risen to $12, $15 or beyond, the chances of buying it out for a billion dollars would be next to nil. Now that it's $5, there is a chance the it would be accepted.
ABUS has 69 million shares with a 38 million float. Over 300 million shares traded between Thursday and Friday. So it's very likely that the float would be in new hands that would be interested in seeing a positive outcome ASAP in order to make a return. They would vote yes to any hostile takeover bid attempt by MRNA. The bigger challenge would be the remaining 31 million shares in the hands of management, funds or other investors very close to the company. That means there is an interest in buying up as many shares as possible in the open market to secure a yes vote. Day traders and new Robinhood investors need to be able to stomach the minute-to-minute volatility and hold through it for a big payoff that should not be too long in coming. If nobody sells their shares low, an interested buyer will have to move up their bids on the open market.
ABUS filed a confidential treatment order with the SEC which we find to be very curious timing given the circumstances. CTOs are enacted to try to keep something secret to keep a company's competitive advantage or in talks during M&A deals.
We see arguments in social media between ABUS and MRNA shareholders, trying to trash each other's stock. This makes no sense to us since it's clear based on market reaction that both companies will do better to work together. ABUS and MRNA shareholders should push for a deal so they can BOTH win, like what happens under so many merger scenario. We are long ABUS but may consider going long MRNA too if signs are there that it's willing to make a deal. We believe MRNA can shoot back up to $80+ upon announcing a deal or settlement with ABUS.
Disclosure: We are long ABUS
What's next for microcap stocks? TradeMiner identifies seasonal trends and market cycles, the Penny Stock Prophet and Microcap Millionaires finds the next big small cap plays in various industries while Addicted to Profits makes trades from a Canadian perspective.
There are also some good books available on microcap stocks and day trading such as:
Mastering Microcaps: Strategies, Trends, and Stock Selection (Bloomberg Professional Library)
The Little Black Book of Microcap Investing: Beat the Market with NASDAQ/AMEX Microcap Stocks, OTCBB Penny Stocks, and Pink Sheet Stocks
Microcap Magic: Why The Biggest Returns Are In Stocks You've Never Heard Of
How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology
How to Day Trade: A Detailed Guide to Day Trading Strategies, Risk Management, and Trader Psychology
A Beginner's Guide to Day Trading Online (2nd edition)
Stock Investing for Beginners: Marijuana Stocks
Here are some other good stock market resources. This includes technical analysis and day trading, dividend stock investing, gold and commodities, sector rotation, options trading and microcap trading strategies:
The dividend stock report from dividendstocksonline.com
The dividend stock report from Dividend Stocks Rock
Goldmasterinvesting.com Ocean Of Gold Report for the top 15 gold mining companies
Trader Review
The Trader's Academy Club
The Wealth Builder's Club from beatthemarketanalyzer.com
MyBB: A Forum For Investors and Traders
Spartan Trader Forex Academy Live Daily Trading Room
And try the Z Code System if you're looking for other ways to make money systematically outside of the stock market.
Goldmasterinvesting.com Ocean Of Gold Report for the top 15 gold mining companies
Trader Review
The Trader's Academy Club
The Wealth Builder's Club from beatthemarketanalyzer.com
MyBB: A Forum For Investors and Traders
Spartan Trader Forex Academy Live Daily Trading Room
And try the Z Code System if you're looking for other ways to make money systematically outside of the stock market.
For those who are interested in trading bitcoin and other cryptocurrencies, here are some links to valuable reports and strategies:
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