We have more good news in this edition of Breakthrough Tech Weekly:

• Sell Airgain (NSDQ: AIRG) for a 37% gain
• Sell Covisint (NSDQ: COVS) for a 9.9% gain.

We’re also giving updates on  Bristol Myers Squib (NYSE: BMY),  Simulations Plus (NSDQ: SLP) and Argos Therapeutics (ARGS). Here are the details:

Shares of Airgain (NSDQ: AIRG) hit their $16 sell stop last week and I am closing out this position. We held the stock for two months and took profits on one half of the position after the shares exploded to the up side in response to a better than expected earnings report in November. Since then the shares have steadily dropped and are not showing signs of improvement so it’s time to close out the entire position with a sizeable two month gain or 37%. %. Not bad for a sixty days of work.

And let’s put some flesh on the bones of the recent purchase of Bristol Myers Squibb (NYSE: BMY), a bona fide member of the Big Pharma club with leading drugs in several key sectors.  As its competitors are closing plants and firing employees, BMY is increasing its R&D spending and taking market share away from competitors in cancer treatments.  This against-the-grain strategy, based on current product strength and a winning long-term strategy during the early stages of Trumpcare’s development, is likely to put the company in a strong position as things change in the healthcare sector.

Bristol Myers’ strategy is straightforward: relocating, refocusing and expanding its research and manufacturing operations along with expanding the uses of its cancer franchise drug Opdivo (nivolumab).  Already approved for and having success against melanoma, renal cancer (where it is considered standard of care) and small cell lung cancer, Opdivo recently gained FDA approval for use in head and neck cancers.  And in Europe it was granted approval for difficult-to-treat cases of Hodgkin’s lymphoma.  On the research front, Opdivo seems promising in mid-stage clinical trials for bladder cancer and late stage trials for inoperable gastric cancer.

BMY delivered 21% year-over-year sales growth in the third quarter and delivered positive guidance for 2017 of $2.85 to $3.05 per year compared to raised guidance of $2.80 to $2.90 in 2016. It cited a potential of nearly 9% earnings growth based on the growth of Opdivo, blood thinner Eliquis (90% sales growth) and Yervoy, which is used in combination with Opdivo in advanced cases of melanoma.  It has begun to experience sales growth after a recent lull.  BMY delivered 21% sales growth in its most recent quarter for the same quarter last year. Next earnings report due in January.

Given the beating that big pharmaceutical stocks have taken in the last year, it’s refreshing to see a company that is adapting its business model to the new normal not by numbers manipulation and smoke and mirrors but by actually concentrating on growing its business and increasing its ability to be competitive in the future.

– Joe Duarte

Sell Covisint for a 9.9% gain

While we rely on our own judgment when deciding to buy or sell a stock, sometimes mutual funds and large institutional investors can tip us off when a company’s doing well or not so well.

We added Covisint (NSDQ: COVS) to our portfolio in April to play the smart car market. Covisint’s products essentially tie all the data from the array of sensors in cars into a single platform. That allows for things such as better fleet management and maintenance scheduling, and keeping your keyless start function secure.

We believe that smart cars will become popular faster than most analysts predict, especially as prices fall. As a small company with a market cap of only about $90 million and no dedicated analysts covering it, we thought Covisint would get a pop from that trend sooner than its larger peers. That has happened – to a point – as the shares gained just shy of 10% since April, but they’ve been stuck at about $2.25 for more than six months now.

On top of that, the company’s top mutual fund and institutional investors have become net sellers of the stock in recent months, dumping nearly 60,000 shares since September on essentially no publically-available news. Average daily trading volume in the stock has also been falling, making the shares much more volatile. That really doesn’t bode well for the stock’s performance.

Considering that the Covisint’s share price has been pretty much stuck since June, the last earnings report actually showed a wider-than-expected loss and big money investors are getting out, the best thing for us to do is follow their example.

Sell Covisint.

Our hidden gem Simulations Plus (NSDQ: SLP) has reported a strong fiscal first quarter, with revenue rising 10.9% year-over-year to $5.36 million. Both its software and consulting services segments reported solid sales growth, up 6.8% and 18.6% respectively. Much of that boost came from new customers as 23 new clients were added, mostly pharmaceutical companies.

Management struck an optimistic note in the announcement, pointing out that government clients like the U.S. Environmental Protection Agency and the Food and Drug Administration have been adding licenses to their contracts. That’s boosted the consensus estimate for revenue this fiscal year, with sales expected to rise from $19.9 million last year to $21.9 million. Earnings per share are also expected to jump from $0.23 to $0.29.

Unlike Covisint, big money buyers also appear bullish on the stock. Over the past two months mutual funds have been net buyers, adding 7,800 shares to their holdings, and institutional investors have picked up just over 50,000 shares. Again, we don’t base our decisions on what the bigger investors are doing, but a stock’s much more likely to pop when they’re net buyers instead of sellers.

The stock, in our special situations portfolio, is up about 4.5% since we recommended in in September.

– Benjamin Shepherd

Continue buying Simulations Plus up to $12.

Argos Partners with Personalis

Last week cancer immunotherapy company Argos Therapeutics (ARGS), in our Special Situations portfolio, announced it has entered into a strategic partnership with Personalis to develop customized genomic treatments for cancer patients. The two companies will use their combined research to improve the process that determines which genes would be most receptive to this form of treatment.

The press release states “Personalis will serve as the primary genomic analysis service provider to support ongoing research efforts to demonstrate that Argos’ lead product candidate, rocapuldencel-T, specifically targets patient-specific neoantigens without the need to identify them first. Argos will utilize the Personalis ACE ImmunoID™ next-generation sequencing (NGS) platform to evaluate tumor samples collected during clinical development of Argos’ tumor-specific dendritic cell technology to treat renal cell carcinoma.” 

This development is one more positive step for Argos, which two weeks ago confirmed that its ongoing trial of recapuldencel-T, now in its final stage, is on track for completion in 2017. The company announced at the same time that it will begin moving forward with plans for the construction of a manufacturing facility in anticipation of gaining FDA approval for this treatment. 

At this point Argos appears to have all the critical pieces in place to achieve commercialization of its cancer immunotherapy treatment sometime next year. Earlier this year the company raised enough capital to see the trial through to completion, and is sitting on more than $60 million in cash. With a market capitalization (total value of all outstanding stock) of only $200 million, we believe ARGS is a prime takeover target and will most likely be acquired by a major pharmaceutical company within the next 12 – 18 months. Argos remains a buy up to $8.

– Jim Pearce