I’m eager to share a new stock idea with you today, as it’s a great example of what I look for in my premium Insider Effect research service.
We’ll get right to it, but I encourage you to read through the full article to see how you can get all the details of this trade for yourself…
Tricida, Inc. (TCDA) is a biopharmaceutical company developing therapeutics to address renal, metabolic and cardiovascular disease.
Regular readers know that I have focused heavily on the biotech sector for the last several weeks, as it is one of the few areas of the market showing strength in an otherwise weak market.
As you can see in the daily chart below, TCDA stock is actually up in the worst bear market in 15 years.
This is a concept known as “relative strength.”
Stocks that outperform in a weak market, especially those making new highs like Tricida, often see huge advances when conditions improve and a bull market resumes.
According to the Centers for Disease Control and Prevention (CDC), more than 37 million people in the United States (roughly 15% of the adult population) are afflicted with chronic kidney disease.
Patients in stages 3-5 of the disease often experience a buildup of excess acid in the body.
This condition, known as metabolic acidosis, affects an estimated 3 million patients in the US alone.
As of today, there are no therapies approved by the U.S. Food and Drug Administration (FDA) for the chronic treatment of metabolic acidosis.
And Tricida is focusing its efforts on satisfying this unmet need in the medical community.
Drug Data Draws Investors
The company is currently in advanced clinical trials with its drug candidate – Veverimer, also known as TRC101.
The drug is designed to bind and remove acid in the gastrointestinal (GI) tract to alleviate the symptoms of metabolic acidosis.
Veverimer showed good results in a Phase 3, double-blind, placebo-controlled, 12-week trial involving 217 patients with chronic kidney disease and an additional 40-week extension trial with 196 of the original subjects.
The results of these studies, along with the profit potential of Tricida’s drug, has drawn the attention and capital of Venrock Healthcare Capital Partners – a leading investment firm specializing in the medical space.
Insiders Have Been Busy
Our primary focus at the Insider Effect is the buying activities of in-the-know insiders like board members and C-level executives.
But insiders are not always employees of the firm whose stock is being purchased. The SEC also defines anyone who owns 10% or more of a company’s stock as an insider.
This is because those individuals share the same access to material, non-public information about the inner workings of the firm.
Activist investors who take such a large equity stake are usually granted seats on the board of directors as well as private briefings from the company’s top brass.
Venrock Healthcare Capital Partners meets these criteria.
After its most recent purchase on July 5, Venrock owns 14.1% of Tricida’s outstanding shares, representing an estimated 81% of the fund’s total capital. This is a huge bet on the success of Tricida.
And Venrock is not a fly-by-night investment fund that makes reckless bets…
The company prides itself on its venture-capital-like approach to investing and rigorous data analysis. It also has a proven track record of success.
The company made early investments in Apple Inc. (AAPL), Intel Corporation (INTC), Gilead Sciences, Inc. (GILD), Illumina, Inc. (ILMN) and IDEC Pharmaceuticals.
Venrock has invested more than $15 million in TCDA stock over the last month and is showing no signs of slowing down.
Unusual Option Activity
Investors are also making huge bets on TCDA in the option market.
Tricida is a small-cap stock worth just $565 million. Typically, stocks this size have very thin option markets with low open interest.
Yet more than 10,000 call options have been bought on TCDA with expirations in November and January.
Someone is obviously expecting a large move in the next three to six months.
Join the Insiders
Now, if you want to get our entry and exit instructions for maximum gains in this stock as well as a way to play TCDA in the options market, you’ll need to join me at Insider Effect.
As I stated above, the primary focus of my Insider Effect trading service is the buying activities of in-the-know insiders like board members and C-level executives…
These folks, in addition to big investors like Venrock Healthcare Capital Partners, are always buying or selling shares in the companies they operate.
And they have a footing of knowledge that Main Street investors simply do not.
I’ll be talking more about this phenomenon in my Insider Effect session today at 12:00 p.m. EST, which is absolutely free to attend.
I’ll cover my strategy for trading alongside corporate insiders and generating potentially massive gains with minimal risk.
I look forward to seeing you there!
Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
