Aethion Medical (OTCBB:AEMD) Rises on FDA Green Light, Email from Investor Ideas
Aethion Medical (OTCBB:AEMD) is moving according to the logic for biopharmaceutical companies. The promise of a new drug or treatment approaching market is always a cause to boost the stock. A free promotion from Investor Ideas may have caused the sudden interest. 
We have not covered AEMD for more than a year, and since then it had various periods, of spikes, drops, yet mostly in a tight range between 7 and 12 cents. The latest news come with extremely positive developments, an FDA approval to treat hepatitis C. Financially, AEMD can rely on the following reserves: 
- $107,970 cash
- $307,046 total assets
- $7.6 million total current liabilities
- $208,781 government contract revenue
- $313,944 net income
The company is recently profitable, at least for the last quarter of 2012. Still, the company is pressured by a long development period, taking in a significant debt. AEMD is capped at a modest $19 million, with 156 million shares outstanding. Daily trading is in the hundred thousands, and the record days move between two and three million shares.
The discussions on message boards are mostly hopeful, appreciating the FDA approvals that bring new treatments closer to market.
For AEMD, the price is low enough that the latest news, coupled with a promotion, could mean shooting for higher levels. Especially given that AEMD had its peak at 35 cents three years ago, hardly an overblown price.
Pharmaceutical companies pose a specific risk, crashing in the case of bad news or upcoming disapprovals and a slow-down in the process of taking a drug to market. This was the case of AP Pharma, Inc. (OTCBB:APPA), which crashed upon the FDA’s negative opinion. The crash of Titan Pharmaceuticals, Inc. (OTCBB:TTNP) was even more dramatic, as all investors expected a positive outcome.
Pharmaceutical companies are not rare among penny stocks, but it is best to do your own due diligence. It is crucial to recognize legitimate small cap companies from new contenders trying to overhype a drug just to attract investors’ interest. To AEMD‘s credit, the promotions are unpaid, meaning they would not last too long and have a disproportionate effect. In 2011, the promotions for this ticker were also short-lived.
