NEW YORK ( TheStreet) -- Last week, my colleague Adam Feuerstein laid out the fundamental bear case against Hemispherx Biopharma ( HEB). I, too, believe the FDA will reject Ampligen, the company's drug for chronic fatigue syndrome. Unlike Feuerstein, I'm a trader of biotech stocks. Hemispherx is a bad investment but the stock remains a good trading opportunity, particularly with an FDA advisory panel for Ampligen scheduled for Dec. 20. Here are four factors that make Hemispherx an interesting trade over the next three months: 1. Hemispherx is a cult stock, and like all cult stocks, there exists a group of retail investor fanatics who will defend the stock to their death. No counter-argument, no matter how reasonable or factually supported, will be considered. Negative stories about Hemispherx are reasons to buy more Hemispherx. Positive stories about Hemispherx are reasons to buy more Hemispherex. If a cult investor can't afford to buy more Hemispherx, he will work to convince others to buy more Hemispherx. As catalysts like FDA panels or approval decisions dates near, the Hemispherx cultists will become more bullish, his price targets more outlandish. For these reasons, the run-up in cult stocks is often exaggerated. 2. The same Hemispherx trade worked great in 2009, so no reason to expect history won't repeat itself this time around. In the middle of 2009, Hemispherx shares went on a run from 50 cents to more than $4.50 fueled by speculation and hype surrounding the FDA's original review of Ampligen. Good traders remember stocks that trade well -- Hemispherx included. I expect traders to be drooling over another chance at Hemispherx this time around. 3. There are no drugs approved specifically treat chronic fatigue syndrome. Whether or not you believe Ampligen works, Hemispherx will own the market if the drug is approved. That's a big opportunity for a company with a $100 million market value and another reason why bulls are so excited. Traders take advantage of such optimism. 4. Hemispherx has clearly defined timelines for its tradable catalysts. Run-up traders, therefore, have a specific date in which to exit trades safely. FDA is convening an advisory panel for Ampligen on Dec. 20. That means two business days before the panel -- Tues. Dec. 18 -- FDA will release briefing documents for the panel, including the agency's clinical review of Ampligen. This FDA review will have a dramatic effect on Hemispherx's stock price, one direction or the other, as will the panel itself.
While I personally don't believe Ampligen will receive FDA approval and I'm not a fan of the company, I do see an excellent trading opportunity as we get closer to the FDA advisory panel. Make note that Hemispherx's share price has already increased over 100% since late July, which could lessen the run-up trade opportunity. Hemispherx can raise cash through an existing $75 million "At-The-Market" equity credit facility and just received shareholder approval to use up to 75 million shares for fund-raising purposes. The expectation that a company is planning to dilute and raise cash can tamp down the run-up trade. And remember, Hemispherx is a trade, not an investment. Never fall in love with a small-cap biotech stock. Messier has no positon in Hemispherx.