Editor's note: This article is a stock pitch made by a member on CAPS, The Motley Fool's free investing community. The pitch is published unedited and is the opinion of the CAPS member whose pitch it is, in this case: zzlangerhans.

Each week I cull a top stock idea from the pitches made on CAPS, the Motley Fool's 180,000-member free investing community. Want your idea considered for this series? Make a compelling pitch on CAPS with a minimum length of 400 words. Want to follow the weekly picks? Follow me on Facebook or Twitter.

Company

AP Pharma (NASDAQ:HRTX)

Star Rating (out of 5)

*

Industry

Health care

Market Cap

$177 million

 

AP Pharma Underperform Pick

Submitted By

zzlangerhans

Member Rating

99.66

Submitted On

3/26/2013

Stock Price At Underperform Recommendation

$0.63

Sources: S&P Capital IQ, Yahoo! Finance, and Motley Fool CAPS.

This Week's Pitch:

I've watched from the sidelines as AP Pharma stock ran and sagged ahead of the APF530 PDUFA, likely the result of a self-fulfilling prophecy of the "run-up" enthusiasts. As always, it is good to be an early adopter of manufactured momentum plays in low float stocks and painful to be late to the party. Getting back to fundamentals, I see AP as a prime candidate for a post-PDUFA decline regardless of outcome. In my mind, the company's goose was cooked when results of the phase III trial indicated that APF530 was equivalent but not superior to the standard of care Aloxi. The smart money abandoned the stock and the next few years were a blur of CRL, time and resource-consuming studies, and dilution. The penny stock share price masks a startling 193M market cap, the result of a massive dilution last July that suggests the company is already looking ahead to their next act after APF530. Even if approved, APF530 is unlikely to become a significant player in the generic-dominated CINV market.

Fool contributor Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.