Speculation is rife surrounding development-stage biotechnology company, Antigenics (NASDAQ:AGEN). Shares of the revenue-bereft firm are up 20% on news that the Food and Drug Administration has lifted its suspension of the company's phase III cancer vaccine trials.

Antigenics is placing big hopes on Oncophage, a personalized cancer vaccine made from a patient's own antigens. The company has late-stage trials in place for skin cancer and kidney cancer, but trials were put on partial clinical hold in September when the FDA sought more information.

News that the hold ended this morning sent shares to $11.50, still well below the $15 peak hit before the hold. With only a few million dollars in annual revenue, Antigenics is valued speculatively at $450 million. It has $105 million in net cash and investments, but is burning through approximately $16 million a quarter, implying that less than seven quarters of cash remain.

Aside from two trials of Oncophage, two other trials are ongoing -- one in phase I for herpes and one in phase II for leukemia. Given that trials take several years, Oncophage is Antigenics' only hope (short of acquisition) to have a drug on the market anytime in the next few years. In other words, a lot is riding on it, and without success the firm would likely need to raise more cash.

Since going public in Feb. 2000 at $18 per share, Antigenics has raised another $116 million in follow-on offerings and $31 million two months ago in a private placement of Series A Convertible Preferred shares. Last year, operating expenses added up to $60 million.

This is a very high risk investment that will either turn into a home run on vaccine approval or foul out and return to single digits, at least until the company can -- if possible -- go to bat again with another phase III trial, likely a few years later. Meanwhile, cash issues would need addressing. It's not an investment for the weak-handed.

In related biotech news...
It's rare, but it happens. Sometimes a small biotech, not unlike Antigenics, is scooped up by a big drug maker. On Friday, Eli Lilly (NYSE:LLY) bought Applied Molecular Evolution (NASDAQ:AMEV) for $18 per share, far above its $11 market price.

Applied Molecular has slight revenue of just $7 million last year, a modest pipeline with drugs only up to phase II trials, and a proprietary technology -- what Lilly was most after -- used to develop improved versions of currently sold biopharmaceuticals.

So, buyouts of biotech upstarts without real revenue do happen, but they're lightning strikes, and biotech investors should not count on them as an investment thesis.

Jeff Fischer, former Rule Breaker co-manager, uses a portion of his portfolio to buy higher risk, higher-reward stocks, but doesn't own companies mentioned.