AP Pharma, Inc. (OTC:APPA) Threatens with Deeper Falls
The new trading week will start on a bad note for AP Pharma, Inc. (OTC:APPA) as it received depressing news from the FDA. Late on Thursday the stock ran down more than 36% to 37 cents per share and more than 40 million shares were shed. In the past months, the APPA ticker was supported by expectations of a favorable FDA ruling, and a second refusal for the company’s anti-nausea therapy cut down the trend even more. 
So far, the underlying business of APPA has shown most of the marks of a pharmaceutical developer that has a long way to go before it hits marketing success. The financials show a mix of debt burden and accumulated losses: 
- $53,506,000 cash
- $55,172,000 total assets
- $4.1 million liabilities
- Zero revenues
- $23 million net annual loss for 2012
On the positive side, the refusal is still not final and might just put off the release of the APF530 drug by about a year. This may cause renewed interest among investors, and a new strong period for the stock. In the past, long periods without the promise of a recent release have depressed the stock to nearly 10 cents, from highs of $1 to $1.10.
Adding to the activity is a promotional email from March 13th that may have attracted more investors than usual to APPA, and as a side effect deepened the fall. The promotion from NYC Marketing is without compensation, probably an attempt to boost the pumper’s past record. The promotion of APPA brings another level of caution to this stock.
A similar development touched Titan Pharmaceuticals, Inc. (OTC:TTNP) last week, when a statement from the FDA decreased hopes for the company’s newest therapy proposal. Fueled by hope, investors shed their holdings at the first sight of negative news, wiping out almost half the stock’s value. TTNP has since then started a slow and shaky recovery, and awaits April 30th when a final verdict from the FDA is expected.
In the past weeks, both APPA and TTNP showed amazing trends on promises of a drug release in the near future. They were part of a general rising direction among small cap biopharmaceutical companies. But the key to these and other tickers is to know their disproportionate rise is a thing of irrational optimism and expectations, which may deflate at any moment. Keep this in mind and mark your acceptable losses and your preferable time period, because APPA and TTNP may be in the mood for a downward shift even if you are not.
