Biodel Inc (BIOD): Under $5 Biotech Stock on the Verge of a Potential 82% Breakout

I recently discovered an exciting opportunity in a biotech stock that is actually trading under $5. This company meets all five of the above criteria, and I think it has solid odds of continued top performance.

The firm I am happy to share with you today is Biodel Inc (NASDAQ:BIOD). Founded in 2003, Biodel Inc (NASDAQ:BIOD) is a Danbury, Conn., based specialty biopharmaceutical company. It specializes in the development and commercialization of treatments for diabetes. The company has several intriguing products in the pipeline, but its ultra-fast-acting insulin product known as Biod-123 is what is causing investor excitement.

The last patients have completed the Phase II clinical trial and results are expected to be announced by the end of September. I won’t get into any scientific lingo, but the results are expected to be positive. Investors have sent the biotech stock soaring more than 80% this year on speculation of positive trials.

Biodel Inc (NASDAQ:BIOD) is not a one-trick pony, as it has three additional products in the pipeline. These include Biod-250, Biod-531 and a Glucagon Rescue Kit, and all are showing promise.

The company boasts a market cap of just over $60 million with $28 million in cash raised from a secondary offering and no debt. It has over 14 million shares outstanding with a float of nearly 8 million. Biodel Inc (NASDAQ:BIOD)’s short ratio is 0.70, and over 61% of the shares are institutionally owned.

Technically, shares have soared from under $3 to just over $5 in the past four months. However, Biodel Inc (NASDAQ:BIOD) recently pulled back and is consolidating between $4 and $4.60. I like this stock as a two-entry play — buying 50% of your expected total position on a breakout above $4.60, and then buying the other 50% on a breakout above $5.25 makes solid technical sense.

Recommended Trade Setup:

— Buy Biodel Inc (NASDAQ:BIOD) on a breakout above $4.60 and again above $5.25
— Set stop-loss at $3.79
— Set price target at $8.35 for a potential 82% gain in 90 days

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