For small cap biotechnology to wake up, all it takes is a monster runner like Prana Biotechnology Limited (NASDAQ:PRAN). This little bio-tech company which deals in therapeutic drugs for neurological diseases ripped higher after results were published on their lead drug candidate PBT2. Their data showed that PBT2 repaired the damage in an Alzheimer’s affected brain thereby facilitating the restoration of cognition in Alzheimer’s Disease. The stock ripped higher, going from $1.47 to a high today of $4.50.
Anytime a small cap biotechnology stock makes that kind of move, other small cap biotechnology stocks follow to the upside in a more limited fashion in sympathy. Just today, small cap bio-tech stocks like Poniard Pharmaceuticals, Inc. (NASDAQ:PARD) and Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) started to move higher.
The key to understanding small cap biotechnology is the insane risk involved but also the amazing rewards. Small cap bio-tech companies are valued at such levels that one major drug can turn the company from a micro cap to a large cap. However, they burn cash at an insane rate. Finding the true winners is somewhat luck and somewhat of an art.