Flamel Technologies (NDAQ:FLML) shares have more than halved since the beginning of the year but OSS Capital believes there is still hope. The activist hedge fund raised its stake in the company by 1 percent today, jumping the share price more than 6 percent as investors banked on a bottom.

The pharmaceutical company dropped substantially earlier this year after a study showed that its proprietary dosing of Coreg CR is no more effective than the original dosing. Given that this is the only drug that the company receives royalties from, it comes as no surprise that the stock was significantly damaged. However, one failure doesn't necessarily spell doom.

Flamel is obviously struggling with operating margins being new pharmaceutical company; however, it does have strong price to sales and price to book ratios. If the company could overcome this one roadblock and sign one or more deals in the near term, there is potential for the stock to return to its prior levels almost 300 percent above its current trading price. This makes FLML a stock worth watching!

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