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Oncothyreon (NASDAQ:ONTY) 40% haircut last week after the company released its latest earnings report. It's not likely the report, however, that disappointed investors as much as it was the indication that Phase III Stimuvax trial results would not be available until early in 2013.

Many investors had expected a much earlier release, while others even counted on an independent monitoring committee being satisfied enough with the results thus far to halt the trial in order tally results early. When that scenario did not pan out, the traders bailed, hence the sharp drop in ONTY share price.

In response to the disappointed expectations, Oncothyreon CEO Robert Kirkman noted last week that investors hoping for an early trial completion held "unrealistic expectations," and that the continuation of the trial "should be viewed as a positive."

Those comments did little to quell investor concerns as shares continued trading in the five dollar range for the duration of the week.

A year is very long time in today's fickle and volatile trading market, and many short term traders have neither the time nor the inclination to sit around for that long waiting for results. It's that kind of attitude that adds to the already volatile share prices of many of these speculative companies, Oncothyreon included, although some of those traders may come back as 2012 closes in anticipation of the early 2013 results release.

On the other hand, the fact that the trial results were not strong enough thus far to compel the independent committee to halt the trial early has been taken as a sign by many, including TheStreet.com's infamous biotech blogger, to be an indication that Stimuvax is not returning the anticipated results.

If that's the case, the short term drop may not be over and ONTY investors who may have bought into last summer's hype will have to decide whether to hold through results, reload during the dip, or simply play the trader's game and move on looking for another short term run somewhere else.

Should Stimuvax prove successful in Phase III, however, a move such as the one experienced by DNDN did after positive Provenge Phase III results is expected, so this is a situation definitely worth monitoring. As Dendreon confirmed, however, even the 'Buy and Hold' long term investors may be better off using some trading shares to play the swings in this sector. It's likely that a few of those opportunities will materialize before the results are released last year.

Oncothyreon has partnered Stimuvax with Germany's Merck KGaA.

Disclosure: No position.

Source: Oncothyreon At $5: Buy Time Or Sign Of Trouble?