UPDATE: The close (Oct. 14) was weak so I don’t expect follow-through.  I sold my small position at a slight loss.

Its been a while since I discussed a true penny stock …not one that simply meets the SEC’s broad definition (under $5 and not traded on a national exchange).  No, I mean a real penny stock, with a price actually measured in pennies.

Here’s one that is on a roar today: NexMed (Nasdaq:NEXM).  Its traded over 18 million shares, and the day is not half over.  Currently, the stock is up about 38%.

NexMed’s move is in reaction to a company press release indicating a brighter-than-expected future for its foot fungus drug candidate:

NexMed, Inc. (Nasdaq: NEXM), a developer of products based on the NexACT^® technology, today announced that it has completed its post hoc analysis of NM100060, the Company’s topically-applied treatment for onychomycosis, commonly known as nail fungus. Based on this analysis, NexMed seeks to pursue signing a partner for further development of the product.

NM100060 has previously been tested in approximately 2,000 patients enrolled in three Phase 3 clinical studies conducted by Novartis. On July 7, 2009, the Company announced the mutual decision with Novartis to terminate the exclusive, global licensing agreement for NM100060.

Vivian Liu, NexMed’s Chief Executive Officer said, “The recently completed analysis of the Novartis data indicates a real effect of treatment in certain patient populations and continues to support our conclusion about the product’s potential for treating patients with mild onychomycosis. With the lessons learned from the Novartis studies, we are convinced that additional Phase 3 studies can be successfully conducted which, we believe, will generate significant results. Toward that end, we are currently sharing, on a confidential basis, NexMed’s highly extensive and proprietary clinical database with potential partners interested in licensing NM100060 for further development.”

If the chart breaks $.24, it could really move.  I initiated a small position at $.20.  Its a gamble — like all penny stocks — but the odds may be a little greater for a continued pop here than betting pass on the craps table.

NexMed (Nasdaq:NEXM) stock chart

DISCLOSURE:  Long NEXM (for a quick trade).
 

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