ARCA Biopharma Inc [NASDAQ: ABIO] is up by 98%, from $5.16 to $10.24 at the time of writing. This follows the publishing of their Genetic-AF phase 2B trial results in the journal of American college of Cardiology. The trial is about a precision medicine for gene targeting therapies, in the treatment of cardiovascular diseases. The publishing by this journal seems to have signaled a step forward for this innovation, pushing the stock up by close to 100%. That’s because, it could become a key revenue driver for the company, once it gains all the necessary approvals and goes to market.
This increase in price has seen ABIO reverse a bearish trend that it had established over the last few months. The reversal has seen this stock clear above a key resistance at $9.18 on the 3-month charts. The reversal has also seen ABIO push above two other key resistance levels, the 3-month 50-day moving average at $6.37 and the 3-month 200-day moving average at $8.19. If everything goes on well with this drug, ABIO could establish a new uptrend, and reverse the losses it has raked up in the last 12-months. In the last 52-weeks, ABIO has underperformed the S&P 500 by a huge margin. In the last 52-weeks, it has lost 41.50% of its value, while the S&P 500 has gained by 12.02%.
Going forward, ABIO will be driven not just by its fundamentals, but by overall market movements as well. After President Trump’s persistent pressuring of the Fed to cut interest rates, the Fed has defied him and decided to hold them. While there was a growing expectation that he would have cut rates, stocking an asset bubble, the decision to hold them could still support the market. The worst case scenario would have been a rates increase. The American economy too is getting stronger, and this too could support the market. For ARCA Biopharma, and its new cardiovascular treatment therapy, this stock could gain much faster. This is evident in its high beta of 3.21, which simply means that it is a stock with a higher level of volatility than the entire market.
It is also noteworthy that the company has very low debt. Its current ratio is 8.55, a signal to it low debt levels. As such, even in an environment of rising interest rates, ARCA is cushioned from the effects of high interest rates.
The market is also keenly watching the trade negotiations between the U.S and China. If something positive comes out of it, it could clear the uncertainty that has plagued the global economy for some time now. This could support the entire market, and for stocks with positive momentum like ABIO, this could play a supportive role to the price. It’s an interesting stock to watch this year, especially with regards to developments around its genetic AF trials, which could drive up the company’s revenues significantly.