Market hackers running out of ammo

But the company now seems to be in a position where it has a chance to deliver on the potential I saw initially. (And the stock price is lower.)

Recently, Nastech announced it was beginning a short Phase II trial for its intranasal insulin and that it was recruiting for its Phase II trials for PYY, a potential treatment for obesity.

As for osteoporosis treatment PTH, though we haven't heard anything more confirming progress with Procter & Gamble (PG, news, msgs), we also haven't heard anything negative. Given the amount of time that has transpired since the last update on this collaborative effort, I expect that one of these days, we will find out that P&G is moving the program toward Phase III trials.

Turning to carbetocin, Nastech's autism compound, preparations are under way for Phase II trials as well. Having an opinion of how those trials might turn out is foolish. We can only hope that the compound will ultimately help those suffering from the disease and the families that care for them. In addition, there are other compounds in the pipeline, such as osteoporosis treatment calcitonin, which could receive Food and Drug Administration approval one of these days, and intranasal Byetta, a treatment for type 2 diabetes.

Now for the exciting subject of RNA interference (RNAi) therapies, which are designed to stop genetic causes of illnesses. During Nastech's most recent Web conference, those of us who follow the company were scratching our heads about why there wasn't more data given -- considering Nastech's stated belief that its approach to RNAi is novel and will aid in delivery, which is the Holy Grail as far as this promising scientific advancement is concerned.

The company's vagueness appears related to its desire not to divulge too many details, as it continues to file patents.

Delectable intellectual property?

Two RNA-oriented companies, Alnylam Pharmaceuticals (ALNY, news, msgs) and Sirna Therapeutics, the latter now owned by Merck (MRK, news, msgs), have been valued at $1 billion each, plus or minus. If Nastech has a unique approach that's sound and doesn't require using patents owned by Alnylam or Sirna, its intellectual property will be worth a tremendous amount of money. And if Nastech really does have a leg up as far as delivery goes, that would be worth far more.

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As I noted, much is not known about Nastech's RNAi program. However, the company has said it is working on plans to separate its RNAi subsidiary from the rest of its operations. If so, it will need to file paperwork on the plans at some point. Those documents will have to describe what Nastech is doing in some detail. Thus, the company's filing could be a powerful catalyst for the stock.

The drug of choice: FDA approval

That's not to say that all of the trials of Nastech's compounds will be successful. But the enormous size of the markets it addresses, versus its market capitalization of $350 million, is quite compelling. In short, I feel that we are at a moment in time where the potential for good news dramatically outweighs the potential for disappointment.

For anyone who has had an interest in Nastech or thought about the stock, I believe now is the time to investigate further. There's always risk in investing, but I believe the risk-reward and the timeliness of this idea are more interesting than anything I've seen in quite a while.

At the time of publication, Bill Fleckenstein owned shares of Nastech Pharmaceutical.

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