NEW YORK ( TheStreet) --B eing a trader of biotech has definite advantages. Instead of trying find the best new drug or hottest technology in the small-cap biotech sector, I trade based on the predictable patterns of human behavior. As I've seen played out over and over, the best-trading stocks are usually not the best investments. A.P. Pharma ( APPA) is a specialty pharmaceutical company that develops improved, long-acting formulations of injected drugs. The company's lead product is APF530, a long-acting formulation of the anti-emetic granisetron. The FDA is current reviewing APF530 with an approval decision date of March 27. A.P. Pharma is seeking approval of APF530 for the treatment of acute and delayed onset chemotherapy-induced nausea and vomiting (CINV.) APF530 is a $900 million market opportunity in the U.S. based upon 5.1 million vials of injectable 5-HT3 antagonists administered for CINV in 2011 and an average selling price for market leader Aloxi (marketed by Eisai) of $175. A.P. Pharma raised enough money in July 2012 to fund the company through an expected launch in the second half of the year. The risk that A. P. Pharma raises more money prior to the March 27 FDA decision is low. Three factors make A.P. Pharma a good trade into the FDA approval decision: First, A.P. Pharma shares trade for 64 cents, which looks cheap to traders even though the company, with more than 300 million outstanding shares, isn't. Traders care about the stock price not market value, so a 64-cent stock will attract penny-stock traders hoping for a quick double or triple on their bets. Second, there are some well-known investors involved with A.P. Pharma, including Baker Brothers, Tang Capital Management and Perceptive Advisors. This gives much-needed credibility to the company and will attract traders and investors who otherwise may not get involved with a penny stock. The fact that A.P. Pharma is essentially owned and controlled by a gaggle of hedge funds is a reason why the stock shouldn't be viewed as an investment. You're never going to do as well long term with this stock as the hedge funds owning most of the shares. Third, sell-side analysts have lofty price targets on A.P. Pharma. JMP Securities initiated with a buy rating and a $3 per share target; Jefferies also has a buy rating and a $1.50 per share price target. These price targets, well above the stock's current value, should give shares some momentum into its FDA decision date. For now, we'll that A.P. Pharma is an investment banking client of both JMP and Jefferies, but remember this for the post-approval rundown.