Editor's Note: A small cap biotech stock recommended by my colleague Ian Cooper is up 26% this week. Ian thinks the best stock could be an easy double... based on a major announcement that's happening on March 31. In Ian's new report below, he explains how you can make a quick pop off the coming announcement of what could be a major medical breakthrough... and how its long-term potential could be even greater.
It's a drug that could cure one of the planet's most prolific diseases.
A medical problem affecting nearly 20% of the world's population, as well as 30% of the U.S. population, according to the CDC.
The World Health Organization expects its levels to swell 75 percent to 700 million people by 2015... an "epidemic tied to rising diabetes and heart disease rates," from the group's Web site.
This global medical crisis has escalated at such an alarming rate, there's an all-out race to treat it.
And on March 31, the company leading the way in the fight to control this epidemic will share the first of its two-part FDA Phase 3 study results.
To say this announcement is highly anticipated is a gross understatement.
Because if the results are positive, this announcement could result in this tiny biotech company producing the best-selling drug in world history. (The drug has already passed Phase 1 and Phase 2 of its FDA clinical trials.)
And it could make early investors a historic windfall.
Of course the medical problem I'm referring to is obesity.
But I'm here to tell you... It doesn't matter if the results of the March 31 announcement are good, bad, or neutral.
Regardless of the outcome, we stand to profit ― most likely inside the next few days. It's the second step in our "double-barreled" trade.
Let me show you what I mean.
It's simple, really. Only a month ago, this biotech stock's share price shot up ― artificially ― on a rogue wave of hype that was certain to come crashing down. After all, when you see a stock moving ― on ZERO NEWS ― a major red flag is signaled.
Fact is, the best stock investment was insanely overbought. It was "walking the talk."
With all this activity, the share price rose above the upper Bollinger Band ― a technical indicator we use heavily in our research. This pattern we detected above the upper Bollinger Band alerted my team and I to an extremely bearish setup. We knew we were dealing with a decidedly overbought condition... one in which our readers could bank a major profit pop.
You see, the share price had to come down. The profit takers ensured it... like lions circling an easy kill. Traders were taking short positions in massive numbers, betting the share price would take a hard fall after the bogus, over-hyped run-up.
That's why we played a "put" option... to profit as hot stocks fell back down.
After 7 days we closed the put option. Readers who acted on our trade left with 44% in their pockets.
But now the time has come to play Round 2... the long side of our trade.
Because on March 31, we'll be getting the news everyone's been waiting for...
That is, the critical Phase 3 data on a drug that can:
Cause weight loss
Is completely safe for the heart, and
Has minimal to no side effects
Its goal: to produce a minimum 5% loss of body weight for patients taking the drug.
Of course, word of this kind of drug being available is about as good as it gets for the roughly two-thirds of U.S. adults considered either overweight or obese. After all, this epidemic, along with its associated conditions and diseases, is responsible for about 9 percent of national health care spending, according to a U.S. Surgeon General's report.
What's more ― not a single drug available on the market today can cure this growing global epidemic.
To catch you up on the drug's latest progress...
Two separate analyses ― conducted by independent safety monitors in a 2006 research study ― report this obesity drug to be safe, after both a six-month interval, and a year of follow-up.
And following the announcement on its Phase 3 data just days from now, the company expects the following to go down, in order:
A peer-reviewed presentation of its data at an undisclosed conference...
A new announcement of its revised data in the fall, and, finally...
Submission of its New Drug Application to the FDA sometime near the end of 2009.
But like I mentioned above, whatever is announced on March 31st won't matter one iota.
That's because of one factor that's practically assured...
You see, the swirling speculation alone on this stock's massive potential should cause its share price to rise, in anticipation of the March 31 announcement.
Another way to look at it...
Get in right now, and ride the announcement's hype to easy short-term profits.
And if the news is even close to what we're expecting, you could be looking at something even better... extreme, long-term profits.
Now while the FDA hasn't approved a true blockbuster drug in quite some time, it's not a stretch to say they're the one government agency that's actually on a roll...
In 2008, the FDA approved 24 first-of-a-kind drugs. That's up from a total of 18 in 2007, 22 in 2006 and 20 in 2005.
Truth is, this really could be the next blockbuster biotech play... bigger than the hottest-selling drugs of the last decade, combined... including Lipitor, Viagra and Zoloft.
And we have our targets set for an 80% or more near-term gain.
That's right. We expect the announcement on March 31 will be nothing but positive. The drug, which helps patients "feel full" by honing in on the brain's serotonin receptor, could answer the single biggest question mark the FDA is addressing right now.
That is, the question over damaging side effects.
And an independent safety monitoring board's 12-month review has something to say about that. It found little or no reason to suggest risk to patients... unlike what contributed to the failures of predecessor medications.
Now only two things stand in the way of this biotech drug:
1. The desired safety and efficacy data from its Phase III program.
2. FDA approval.
What's more intriguing, this obesity drug has something else in its favor:
The world needs it.
According to the government's own statistics, the number of Americans considered obese now exceed the number of Americans deemed "just" overweight. Then there's the study just published in the U.K. medical journal The Lancet.
It found that carrying a full one-third more weight than what doctors would consider ideal equates to the same death risk as being a lifetime smoker.
David Katz, founder of Yale University's Prevention Medicine Center in New Haven, CT, had this to say in an interview with Bloomberg... "This is a reaffirmation of how fundamentally important it is for society to rally against" obesity... The takeaway message is that obesity is lethal."
Which is why the market for a fat-busting drug ― without the dangerous side effects ― is worth billions.
And if the results of this obesity drug's 12- to 24-month safety study is as good as what's being indicated, we could be looking at an investor buying spree across the globe.
Still yet, there's one more profitable possibility:
Looking beyond the safety study, the company's drug could be partnered with one of the major biotech companies... and the potential is mind-boggling. Given that the CDC reports 30% of Americans are obese, as compared to 14.6% in 1971, the market is obviously huge.
You see, the potential for annual sales in this market is $10-$15 billion. And with what they bring to the table, this small biotech company could be a serious buyout target.
As I said, it's a company that could literally make a lifetime's fortune for some investors.
Sure, approval of this drug won't happen until the end of 2009 or early 2010... assuming the results are positive.
But the real window for getting in early ― to capture the biggest possibe gains ― is right now... specifically within the next few days.
Again, here's how it could go down:
Before March 31, the best stock investment will shoot up on positive results. To be sure, we'll have gotten in well before the herd.
Of course, this profit maneuver isn't for everyone.
It's only for those investors willing to make a fortune in a small cap stock that has investors everywhere salivating.
So if you're one of those investors, I urge you to take a risk-free trial of my Small Cap Trading Pit advisory.
For only $99 a year, you'll get the following:
Instant access to the Small Cap Trading Pit portfolio,
All the details of our new biotech recommendation, compiled in our new report: The Double-Barreled Biotech Profit Play (which includes step-by-step instructions on executing each of the two trades),
Investment Report #2: The 10 Maxims of Fortune
Plus, 26 information-packed issues detailing the opportunities in the explosive small cap sector, industry updates, and our top stocks recommendations.
If for any reason SC Trading Pit doesn't match up to your expectations, simply let me know within the first 30 days, and I'll refund every penny. No questions asked!
But you'll need to act quickly, in order to profit on the amazing new biotech trade we've brought to your attention here.
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