Hemispherx Biopharma: Does Patience Pay Off in Pharmaceuticals?

Let's face it, small bio-pharmaceutical companies are risky picks. But sometimes, you can pick one up at a very low price and watch it then develop into the next big thing in drugs and make you rich.

In December 2006, I blogged about Hemispherx BioPharma, Inc. (HEB), one such small, risky pick -- but one that at the time, I felt was worth the gamble, simply because of the potential of a drug in the wings called Ampligen. HEB was about to file for FDA approval on this drug that has broad-spectrum anti-viral and anti-cancer properties and treats Chronic Fatigue Syndrome, among other illness.

Aside from the promise of Ampligen, I said there was little else at the time to recommend this company. However, its focus is a good one: Drugs treating viral and immune-based acute and chronic disorders like multiple sclerosis and West Nile Virus, along with AIDS, genital warts, hepatitis C, and acute respiratory syndrome.

A reader has asked me what I think of HEB now, as it has not yet skyrocketed upward. I wouldn't personally sell now. The process of drug approval is notoriously slow. While Ampligen has finished Phase III trials, according to the HEB website, approximately 500 patients have received Ampligen in clinical trials authorized by the Food and Drug Administration [FDA]. It does note vaguely, however, that, "Certain of these studies to date have not been well-controlled and accordingly additional tests will be necessary for support of regulatory approvals." I don't like the sounds of that.

What I do like the sounds of, however, is the news that HEB has started clinical trials as part of an accelerated evaluation of Alferon, a potential new experimental therapy for Avian Flu. We read almost daily about the looming Avian flu health crisis, but there is yet to be found an effective vaccine or treatment. Could this be it? According the HEB website, the company is in discussions with the U.S. Department of Defense regarding its biopreparedness, biodefense initiatives and priorities.

I jumped on HEB in the $2 range, and in January it jumped up as high as $2.47. Now the stock is floundering at $1.62 after poor year-end results were announced. But remember, drug trials and approvals take a long time. I could dump HEB now and absorb the loss of $.40 cents or so, or I could hold on. At this point, I know the most I can go down from here is by $1.62, since that is all shares are worth right now!

Type of stock: A small pharmaceutical company developing drugs for viral and immune-based acute and chronic disorders. This is a high-risk pick, but I still believe that HEB has potential in Ampligen, and I'm interested to see what comes from the Alferon evaluations. Tread very carefully, though.

Price target: When I recommended this stock in December 2006, it was trading at around $2. Now it is at $1.63, nearing 52-week lows. I'm not giving up yet, but am fully aware that this is going to be a hit big or miss completely. I'll know better in the year to come and will keep following-up with all of you.

HEB 1-yr chart

Comments

[ericcourtney]

Glad to see someone agrees re Biotech in 07 . The patience has been tested with this sector which means suprises are in store . It is NOT a rotating amenable area as the TECHS?OIL?TECHS?GOLD?O... rotation but one that requires fundamental detective work and