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2 Nasdaq Small Caps To Watch Include Peregrine Pharmaceuticals, Inc. (NASDAQ: PPHM) And A123 Systems, Inc. (Nasdaq: AONE)

|Includes:AONEQ, Peregrine Pharmaceuticals Inc. (PPHM)

NASDAQ: PPHM has seen an explosion in price and volume the last few months; from lows of $0.39 in June the stock saw a recent high of $5.14 per share.

Currently trading at $4 per share, Peregrine Pharmaceuticals, Inc. is a biopharmaceutical company with a portfolio of innovative monoclonal antibodies in clinical trials focused on the treatment and diagnosis of cancer.

PPHM used to be a $16 stock but was dragged down over the years due to high overhead and a failure to get any drugs out of the development stage and into production. At the beginning of the summer it looked like game over for PPHM who was facing delisting to the otcbb and received little attention from investors.

Recently however results for their double-blind, placebo controlled, Phase II bavituximab trial in second-line non-small cell lung cancer have been coming back very positive and the company is now planning for an end-of-phase II meeting with the U.S. Food and Drug Administration and plans to initiate a phase III trial by mid-2013. PPHM stock is exploding as investors know that FDA approval could drive this stock way higher.

Another Nasdaq small cap to watch is A123 Systems, Inc. (Nasdaq: AONE) a developer and manufacturer of advanced Nanophosphate® lithium iron phosphate batteries.

The stock has been pushed down over the years from highs over $25 per share as the company continues to struggle with high over head, declining revenues and serious liquidity issues. Now trading at around $0.30 AONE has developed a huge short position and many investors and bargain hunters are buying up shares here in the hopes that a massive short squeeze drives this one back over several dollars per share.

A123 Systems has changed little since it was valued at $25 per share and their High-Performance Lithium Ion Battery Technology can only grow in demand as the world continues to embrace new and cleaner energy sources. They still have plenty of time to either get the price back over $1 or initiate a reverse split to avoid the delisting to OTCBB; in the meantime AONE just might provide investors with some great trade opportunities.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Stocks: PPHM, AONEQ