Stock Alert for A.P. Pharma Inc. (APPA)

This story is a great example of how investing in small cap biotech stocks can be unnerving and sometimes very risky. It takes a strong stomach to weather the ups and downs that come with getting a new drug to market. A.P. Pharma Inc. (APPA) is a specialty pharmaceutical company focused on developing pharmaceutical products using their Biochronomer polymer-based drug delivery technology. Their primary focus is on their lead product candidate, APF530, which had completed a pivotal phase III clinical trial for the prevention of chemotherapy-induced nausea and vomiting and had already been submitted with a New Drug Application (NDA) to the FDA.

I was deep into this stock, believing approval was just around the corner, when last week they received a Complete Response Letter from the FDA regarding APPA's NDA. After the FDA's review of APPA's file they had several questions that precluded the approval of the NDA in its current form. APPA's stock had closed on Thursday March 18, 2010 at $2.06 per share, before the announcement of the Complete Response Letter. On the news, many shareholders bailed out in the pre-market or at the open of the regular session and the stock price plummeted approximately 57% to $0.88 where it opened the next day. I thought that none of the concerns were drastic and all of them could be addressed with moderate to relative ease, thus, I decided to hold on to the stock and see where it was going. I had bought in at $1.76 per share and after a few hours the initial shock wore off and the stock started back up again, so I doubled my position at $0.96 per share. Today APPA closed at $1.10 per share, climbing $0.22 in 3 market days. I still think this is a great stock; they just have a few issues to work out. The success of this company is hinged on the approval of this drug; however, I have no doubt that A.P. Pharma will meet FDA standards for approval. Nevertheless, this did set the timeline back; it will probably be 2011 before they will be in position to resubmit the NDA. Yesterday, Stockpreacher.com published a stock alert for APPA:
Stock Alert for A.P. Pharma Inc. (APPA)