Loaded With Potential (KERX)

When shares of Keryx Biopharmaceuticals (KERX) spiked to over three dollars on Tuesday after the company issued a press release regarding the continued "impressive" efficacy of it's treatment for Advanced Metastatic Renal Cell Carcinoma, Perifosine, I stated that it was a good time to take some profits after the recent, short-term triple in price.

Now that the stock has quickly declined back to the two dollar range, it may be time to accumulate for the long term.

Keryx is loaded with potential, especially now that both of the company's product candidates, Zerenex and the aforementioned Perifisone, have been proven successful in Phase II trials. Phase III trials are now pending, according to the company's website. For those that may be new to the Keryx game, Zerenex is a treatment for developing kidney disease and Perifisone treats Advanced Metastatic Renal Cell Carcinoma.

As for the company's stock and why I sold on Tuesday, I want to emphasize that I usually do not sell my entire position of a stock after a run like the one that KERX enjoyed following the recent press releases that identified positive Phase II results. I like to maintain a base of shares to hold for the long term while trading in and out with a handful of 'trading shares'. This way I can realize some profits and reduce my risk exposure to the stock with my trading shares, but still be along for the ride with my 'base shares' if unexpected news comes out that sends the stock higher.

The reasons why I changed gears and sold my whole position and waited for a possible retreat in price are as follows:

- The latest results were only regarding Phase II trials and the company still has a long way to go before taking these products to market.

- Financing and/or stock dilution is always a concern after a big post Phase II run and the company needs to raise cash to fund Phase III trials.

- Quite simply, a quick triple in price of a 'Phase II biotech stock' usually leads to a quick retreat if additional news is not pending.

That being said, I'm back on track with KERX and bought back in on Friday with the intention of accumulating for the long term.

Disclosure: Long KERX.