Patents Could Push This Stock Up
GlobeNewswire reported, “uniQure N.V. (Nasdaq: QURE), a leading gene therapy company advancing transformative therapies for patients with severe medical needs, [recently] announced the issuance of two new patents covering AMT-130, the Company’s gene therapy candidate for the treatment of Huntington’s disease.
AMT-130 comprises a recombinant AAV5 vector carrying a DNA cassette, encoding a microRNA that non-selectively lowers or knocks-down human huntingtin protein in Huntington’s disease patients.”
The news comes with the stock at an important support level.
The press release continued, “The U.S. Patent and Trademark Office issued U.S. Patent 10,174,321 on January 8, 2019 and the European Patent Office issued EP 3237618 on May 22, 2019.
The claims as granted cover the RNA constructs specifically designed to target exon1 and the embedding of these Huntington’s disease RNA sequences into the miR451 scaffold, which is exclusively licensed to uniQure from Cold Spring Harbor Laboratory (CSHL).
The claims also cover certain expression cassettes comprising the RNA constructs and the use of gene therapy vectors including AAV vectors encompassing the described expression cassettes.
AMT-130 incorporates the Company’s proprietary miQURE™ gene silencing technology platform, which is designed to degrade disease-causing genes, without off-target toxicity, and induce silencing of the entire target organ through secondary exosome-mediated delivery.
Preclinical studies of miQURE-based gene therapies have demonstrated several important advantages, including enhanced tissue-specificity, improved nuclear and cytoplasmic gene lowering and no off-target effects associated with impact on the normal cellular miRNA or mRNA mechanisms.
miQURE technology also has been incorporated in the Company’s gene therapy product candidate for spinocerebellar ataxia Type 3, another central nervous system disorder.
“We are very pleased with the continued expansion of our patent portfolio related to AMT-130, which has the potential to be the first one-time treatment for Huntington’s disease patients and is expected to enter the clinic this year,” stated Sander van Deventer, M.D., Ph.D., chief scientific officer at uniQure.
“These patents cover our novel gene therapy approach to Huntington’s disease, which we believe is the only investigational therapy specifically designed to silence both mutant huntingtin protein and the highly toxic exon1 protein fragment.
In extensive preclinical studies to date, AMT-130 has demonstrated the potential to silence disease-causing protein in the brain, including within the cortex and the deep structures where Huntington’s disease is known to manifest.
The U.S. Food and Drug Administration has granted orphan drug designation and Fast Track designation for AMT-130 in Huntington’s disease. AMT-130 has received an Orphan Medicinal Product Designation from the European Medicines Agency making it the first investigational AAV-gene therapy in Huntington’s disease to receive such designation.
The company expects to initiate clinical testing for AMT-130 in the second half of 2019.
The importance of the support in the stock can be seen in the weekly chart. News of the testing could push the stock up.
A Trade for Short Term Bulls
As with the ownership of any stock, buying QURE could require a significant amount of capital and exposes the investor to standard risks of owning a stock.
To reduce the risks of a trade, an investor could purchase a call option. This allows them to benefit from upside moves in the stock while limiting risk to the amount paid for the options. However, buying a call option can also require a significant amount of capital and includes the risk of a 100% loss.
Whenever an option is bought, the maximum risk is always equal to 100% of the amount of spent to purchase the option. Since options cost significantly less than a stock, the risk in dollar terms will usually be relatively small to own an option.
To further limit the risks of the trade, an investor could use a bull call spread. This strategy consists of buying one call option and selling another at a higher strike price to help pay for the cost of buying the first call. The spread strategy always reduces the risk of an options trade.
This strategy is designed to profit from a gain in the underlying stock’s price but has the benefit of avoiding the large up-front capital outlay and downside risk of outright stock ownership. The potential risks and rewards of this strategy are summarized in the chart below.
Source: The Options Industry Council
Both the potential profit and loss for the bull call spread are limited. The maximum loss is equal to the net premium paid when the trade is opened. The maximum profit is limited to the difference between the strike prices, less the debit paid to put on the position.
This strategy could be especially appealing with high priced stocks where the share price and options premiums are often a significant commitment of capital for smaller investors.
A Specific Trade for QURE
Every day, we scan the markets looking for trades with low risk and high potential rewards. These trades are available almost every day and we share them with you as we find them. Now, it’s important to remember these are trading opportunities in volatile stocks.
When we find a potential opportunity, we evaluate it with real market data. But because the trades are volatile, the opportunities may differ by the time you read this. To help you evaluate the current opportunity, we show our math and explain the strategy.
For QURE, the June 21 options allow a trader to gain exposure to the stock.
A June 21 $65 call option can be bought for about $1.82 and the June 21 $70 call could be sold for about $0.80. This trade would cost $1.02 to open, or $102 since each contract covers 100 shares of stock.
The amount paid to enter the trade is the largest possible loss on the trade. This is generally true whenever a trader is creating a debit to enter an options trade. “Creating a debit” means there is a cost to enter the trade. You could create a debit by simply buying puts or calls to open a directional trade.
In this trade, the maximum loss would be equal to the amount spent to open the trade, or $102.
The maximum gain on the trade is equal to the difference in exercise prices less the amount of the premium paid to open the trade.
For this trade in QURE the maximum gain is $3.98 ($70 – $65= $5; $5 – $1.02 = $3.98). This represents $398 per contract since each contract covers 100 shares.
Most brokers will require minimum trading capital equal to the risk on the trade, or $102 to open this trade.
That is a potential gain of about 290% based on the amount risked in the trade. The trade could be closed early if the maximum gain is realized before the options expire.