Cima Labs Inc. is a drug delivery company that develops and manufactures products based upon its patented OraSolv technology for marketing by multinational pharmaceuticals companies. For the FY ended 12/31/00, revenues rose 79% to $23.9M. Net income before accounting change totaled $4.8M vs. a loss of $1.3M. Results reflect increased in shipments of branded prescription products, improved margins, and higher interest income.

May 29, 2001

Cima Labs has been steadily forging ahead since 4/27/01, when it announced the U.S. launch by AstraZeneca (NYSE:AZN) of its Zomig-ZMT orally disintegrating migraine headache compound. Cima specializes in producing products for pharmaceutical companies that are based upon its OralSolv and Durasolv drug delivery systems. This enables patients to ingest drugs through fast dissolving technologies without the use of water and without any adverse tastes. Turning to CIMA's chart, we see that the stock has just broken out of a seven-month base pattern. Today's strong advance was a new closing high for the stock and judging by the width of CIMA's base, the price target on CIMA becomes $107. Traders wishing to initiate positions in CIMA could look to do so on an advance above today's high of $75.35 on volume of at least 300,000 shares. We need volume to come in strong to confirm CIMA's strength. Speaking of volume, we issue one caveat regarding CIMA: volume can be weak at times, which adds to the biotech stock's volatility. Therefore, this is an aggressive play that might call for half positions. Our initial stops are set at $67.95 to protect against a turnaround.

Picked on May 29th @ $76.95
Change Since Picked 0.00
Stop Loss @ $67.95

We knew this stock was volatile when we got into it. That is precisely why we tightened our stop up to $80 to lock in profits when it looked like the stock could be vulnerable for a pullback. As it turned out, the stock did decide to collapse on Friday, hitting our stop at $80.

Picked on May 29th @ $76.95
Profit/Loss = +3.05 (+4%) (Stopped out Friday @ $80.00)
Best Profit = +8.80 (+11%)

June 7, 2001

You know a stock has institutional support when it rockets close to 10% in one day and never settles back the next day. We were anticipating that CIMA would retrace back to the $81 level but instead, the stock made a new high today. Support should be coming into CIMA around $82.50 and the MACD is signaling a new up trend. Traders that are considering opening a position in CIMA could look to do so on a bounce off of $82.50, or on a strong advance through resistance at today’s high of $85.75 (also the closing price).

Picked on May 29th @ $76.95
Change Since Picked +8.80
Stop Loss @ $80.00

June 5, 2001

CIMA rocketed higher on the heels of bullish developments within the biotech sector. Many new drugs are nearing FDA approval, which tends to get investors interested in the whole sector. As for our play, CIMA has now officially broken out of its previous base. In addition, its MACD just issued a buy signal. However, with today's $6.34 move higher, the stock has become very vulnerable to a pullback. If you are considering opening a position in CIMA, it might be wise to be patient and let the stock come back towards support at today's low of $78.60 before jumping into this biotech play. We are moving our stop up to $80.00 to lock in some quick gains in this volatile stock.

Picked on May 29th @ $76.95
Change Since Picked +7.42
Stop Loss @ $80.00

June 3, 2001

CIMA kept to a fairly tight intraday range on Friday, as the stock continues to build a base around $75. Support has come in at $73 and resistance has established itself at $78.35 (Thursday's high). Traders who wish to play CIMA should wait for the stock to confirm a breakout over $78.35 with daily volume of at least 400,000 shares.

Picked on May 29th @ $76.95
Change Since Picked -2.20
Stop Loss @ $67.95