The company labored on this drug for at least 5 years, spent over $80 million, even had the Department of Defense saying what a great addition it would be for soldiers on the front lines. The possibilities for the drug were enormous. With the threat of a nuclear attack (think dirty bomb on the small side, actual nuclear bomb on the big side) one of, if not the greatest, threats to everyone in the world, there wouldn't be a government, corporate or individual who wouldn't want this drug.

It has a shelf life of 2 years and can be stockpiled in large quantities in major urban centers. Everything was going for this stock. It ran to $35 a share at one point.

I had the good fortune of seeing a presentation by the company. I was sold and bought a great deal of it, even went on margin, absolutely sure the drug, Neumune, would be approved by the Department of Health and Human Services. It looked like a slam dunk.

But the stock didn't act like it was a slam dunk. In fact, it continued to move down until it reached about $5 a share. When it rallied a little, the company issued more shares in anticipation of needing the funding to manufacture the new drug. Immediately after the placement of the new stock, the price went lower.

The company has no other product. It has no revenues except for a small grant and interest income from its cash. Everything was being bet on this one drug with only one buyer: The federal government.

Then it came time for HHS to ask for proposals for treatment of radiation sickness in case of a nuclear attack. There was only one real answer: Neumune. That was in early 2006. Hollis submitted its proposal. Then we all waited. When the deadline came, HHS said it wanted more time so it put off awarding a contract for 6 months. When that time had elapsed, it wanted more time. Finally, the drop dead date was determined for March of this year.

Every investor in the company was sure the time had come to be rewarded for years of waiting. We all anxiously awaited the announcement. But the stock didn't reflect any anticipation of good news. It stayed around $5 a share. If the award came, depending on the size and other orders that would surely follow, the stock would certainly go to $10 or even $20. The HHS had even said that Hollis's proposal fell within the guidelines it had written. Surely, this had to happen.

Of course, it didn't have to happen, and it didn't. HHS said the proposal didn't meet its guidelines and therefore, no award was given. The stock tanked to trade at the value of its cash, about $2.30 a share. I lost a bundle, in fact a lot more than a bundle. I was sad.

I had made a huge mistake by leveraging my position, betting too much on an uncertain outcome on a stock that had no other revenue generating products. No sales and no profits. The company should only trade on its cash value even though its research could lead to other drugs. It now languishes just above its cash value after filing for an Initial New Drug application for the treatment of diabetes. It will enter Phase 1 trials sometime this year. Revenues from that, if it is efficacious, will be years away.

Next Week: The other biotech.