Soligenix, Inc. (OTCBB:SNGX) Adds 10% on New R&D Contract

Soligenix, Inc. (OTCBB:SNGX) is one cool stock: its percentage rises in the past week have been relatively small. On Wednesday, SNGX added just 10% to reach $2.39, on volumes around $550,000. True, SNGX has a low number of outstanding shares. But two contracts in one week, for over $32 million, is rare news for a penny stock.

What is interesting is that SNGX has listed itself as a development stage company, and only several of its therapies are complete. The last contract for $6.4 million is awarded for three years, with a one-year base period and continuation options. The money should go toward testing and completing the treatment against acute radiation symptoms. And last week, the US Department of Health awarded $26.3 million for the same treatment proposal.

Now, it is up to SNGX to absorb the money efficiently and take the contracts to their upper limit, and finish the OrbeShield brand. The next days will show how this affects the SNGX stock, which already absorbed a lot of good news, rising to a robust price for a penny stock. And the value of the contracts is close to the current market value of around $45 million. SNGX also has just 19 million shares outstanding, and with the agencies’ funding, may hardly need to issue new shares, out of the 50 million shares authorized.

Now, SNGX would be lucky to avoid bad news, and complete the clinical trials in a manner that won’t test investors’ patience. With promising therapies, even one piece of bad news may wipe out a lot of value, just like it happened for Titan Pharmaceuticals, Inc. (OTCBB:TTNP).

In the past days, another high-quality pharmaceutical stock made a robust rising trend- Elite Pharmaceuticals, Inc. (OTCBB:ELTP). But despite the promise of upcoming therapies, the stock could not hold on and corrected by about a third. Now, ELTP has fallen from a peak of 16 cents toward 12 cents, opening down on Thursday.

At nearly $2.40, SNGX may take a breather, although investors’ forums are mostly positive, underlining the good positions now achieved by previous long-term holders. And a higher price is not a guarantee against corrections or negative trends. SNGX is not currently promoted, which may keep the rise in proportion to the real success of the company.

Pharmaceutical stocks are often attracting great loyalty from investors, and this gives vigor to trading. But SNGX appeared only recently among the top-traded tickers, and has yet to prove its trends and qualities. It is best to estimate well your ability to absorb risk before trying the strength of this ticker.