Tuesday's Small Cap Biopharma Catalyst Trade List

 | Dec 11, 2012 07:40AM ET

Trading biophama stocks before a catalyst event, if done correctly, can be a very profitable proposition. Some traders and investors who enjoy bringing more risk into play often times will hold through the actual catalyst event. While this does bring more risk into play, the reward from engaging in this can be a massive one.

Today, I list five small-cap companies and their respective catalyst events for traders to consider. Small-cap biopharmas can experience very volatile price moves, so it's wise to take this into consideration before engaging into a trade with them.

Synta Pharma (SNTA)

Catalyst 1: Synta expects results from its Phase I compassionate use trial, where a single patient earlier this year , Top-Line Data from its clinical drug Perifosine, failed to meet its endpoint in treating patients with refractory advanced colorectal cancer versus placebo.

If Zerenex fails to show positive data here, this would be a death blow to the company. Positive results however will certainly rally the stock, potentially surpassing its 52 week high.

Hemispherx Biopharma (HEB)

Catalyst: The FDA has scheduled an Advisory Committee Members Meeting (ADCOMM) to discuss the Ampligen New Drug Application for Chronic Fatigue Syndrome (CFS) which is currently under review by the FDA. The date of the ADCOMM review has been tentatively set for December 20, 2012. As previously announced, the PDUFA goal for the FDA to complete its review is February 2, 2013.

Currently, there are no approved treatments for CFS and patient advocacy groups are pushing hard to have one available that is both a safe and effective treatment.

However, as many point out, Hemispherx's Phase III studies here might not be up to what the FDA wants to see in order to approve the drug. I do think it's entirely possible the agency might make an exception here because as mentioned prior, there are no Rx treatments for CFS. A recommendation for approval here of Ampligen by the ADCOMM would surprise many. This surprise would lead to a huge gap up as much as 200% in my estimation, if the ADCOMM does in fact give the drug the green light.

Hemispherex is the riskiest trade out of five mentioned in this write-up. I feel Synta has the most short-term upside potential, while Alexza see the largest stock percentage gain, if Adasuve is approved.

Disclosure: I am long SNTA.

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Scott Matusow

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