SIGA Could Be Ready For A Large Short-Term Pop

| About: SIGA Technologies (SIGA)

SIGA Technologies, Inc. (NASDAQ:SIGA) SIGA is a bio-defense company that engages in the research, discovery, development and commercialization of novel products for the prevention and treatment of infectious diseases. Its novel products are also used in defense against biological warfare agents comprising smallpox and arenaviruses. The company provides ST-246, an orally administered antiviral drug that targets orthopox viruses. It also develops anti-arenavirus drug candidates for hemorrhagic fever viruses, including dengue fever, rift valley fever, lymphocytic choriomeningitis virus and ebola. In addition, the company offers broad spectrum antiviral candidates against viruses in the Poxviridae, Filoviridae, Bunyaviridae, Arenaviridae, Flaviviridae, Togaviridae, Retroviridae, and Picornaviridae families. Further, it has four drug series in the pre-clinical development stage against four serotypes of virus. The company was founded in 1995 and is headquartered in New York, New York.

SIGA's lead compound, ST-246 (Tecovirimat), is a novel drug under development for the treatment of smallpox, a potential bioterrorism threat. Currently, the rights to this compound is in dispute in a court case in Delaware.

On Dec.16th, 2011, The Delaware Chancery Court denied SIGA'S motion for reconsideration of certain aspects of the Court's post-trial decision in the litigation brought by PharmAthene, Inc. over rights to ST-246. As previously disclosed, the parties are now obliged to attempt to agree on language that will implement the Court's post-trial decision or, failing such agreement, submit their respective proposals for implementing language to the Court for decision. Once the Court enters a final judgment implementing the post-trial decision, SIGA intends to appeal the decision and judgment to the Delaware Supreme Court.

Obviously, not a great sign for SIGA in this dispute. The damage to the pps was already done long before the latest ruling in this dispute. Starting in April of 2011, rumors of legal trouble began flying around and the stock plummeted.

Needless to say, SIGA'S stock has been under tremendous pressure ever since;

This chart just looks terrible, unless you shorted it from The 52 week high of 15.66. SIGA was trading at $2.57 as of 1/13/12. The Director of SIGA is certainly feeling good about the price of his stock at these levels;

Buy [P] Sell [S] P 2012-01-04 16:12:12 SIGA TECHNOLOGIES INC Bevins William C director 50,000 $2.44 $122,055.00

A few other insiders also feel confident, except for one. You can see the roster here.

Institutions still hold about 34% of the stock;

Share Statistics
Avg Vol (3 month): 539,513
Avg Vol (10 day): 568,725
Shares Outstanding: 51.42M
Float: 37.32M
% Held by Insiders: 27.30%
% Held by Institutions: 34.80%
Shares Short (as of Dec 30, 2011): 7.34M
Short Ratio (as of Dec 30, 2011): 11.40
Short % of Float (as of Dec 30, 2011): 24.80%
Shares Short (prior month): 7.47M
My final thoughts are that if The Director bought 50k shares at the current pps level, he might be playing for a short term pop. If he bought more shares at this price level, let's say 200k, then a long term play could be in order here. He might know something is coming soon to pop the pps up nicely.

I think SIGA may be a good buy for a shorter term swing trade. It does not seem like things can get much worse for SIGA. The float is relatively low. The 3 month daily Average Volume is 539,513, liquid enough to leverage a lot of shares in and out. This is definitely not a stock at this time I would want to hold for the long term. In my opinion, this swing trade should be good for a move up to 4-5 dollars a share. That would be a nice return for those who are willing to take the risk.This stock might be a good long term play once SIGA resolves the legal issues they currently face.

My best long term growth stock pick selling near the price level of SIGA is Antares Pharma. (AIS) You can refer to my author profile here to read my articles that cover Antares Pharma and why it is my best small cap pick of 2012. I encourage everyone to do the due diligence on Antares.

Disclosure: I am long AIS.