Scanning the PR newswires is just one of the ways I get trade ideas. And sometimes, it’s a way to catch a hot penny stock that’s on the way down. Hot for the wrong reason…
This week, I’ve picked up on a biotech stock that just hit a brick wall head on…
PharmAthene is a biodefense company developing medical countermeasures against biological and chemical threats in the US. The company’s product candidates include SparVax, a protective antigen anthrax vaccine for post-exposure prophylaxis. PIP also makes Valortim, a human monoclonal antibody to protect against and treat human inhalational anthrax and as a medical countermeasure for nerve agent poisoning. The company serves the United States Department of Defense, Chemical Biological Medical Systems, Biomedical Advanced Research and Development Authority, the National Institute of Allergy and Infectious Diseases, and the National Institute of Health.
Financially, PIP has collaborated with Bristol-Myers Squibb for developing Valortim. But unfortunately the company has run into a bit of a problem with their SparVax product…
Just this week, the company received notice from the Department of Health and Human Services (HHS), Biomedical Advanced Research and Development Authority (BARDA). The government agencies notified PIP of its decision to de-scope the current SparVax anthrax vaccine contract through a partial termination for convenience. BARDA will provide additional guidance to PharmAthene on the contractual changes, following which PharmAthene will evaluate its options for the SparVax program.
That’s not what a developmental drug company wants to announce… and the stock plummeted as a result. The chart above shows the carnage- falling 28% over the past month alone!
Without the financial support of BARDA, the drug company will have to put this product on hold until another suitor can be found. Just as with their Valortim product, PIP will need to pick up a big pharma partner like Bristol-Myers Squibb (or the government will need to step back up to the plate again).
But easier said then done.
The Big 100% Winner-
When a drug company gets FDA approval, or passes from one clinical stage trial to another… the stock tends to pop as a result. In fact, one of our premium stock picks that just received positive news from the FDA shot up 100% the very same day!
If you’re curious to know which stock I picked, (read more here.)
In the end, PIP could still end up a good pharma investment- especially for a penny stock. The company actually has $17.9 million in revenue, and also sports a very low 0.1x longterm debt-to-equity ratio… meaning they’re not dead in the water just yet.
Keep an eye on the news like I do, and you could end up catching a signal that PIP is a buy- but not just yet…
Keeping you one step ahead,