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The bears came out to party Wednesday and it was a miracle if any stocks walked away unscathed. We spent the day out and about prowling for buying opportunities. One stock that caught our attention was Pharmion Corporation (PHRM), whose shares somehow defied yesterday's massacre. We are just beginning to get acquainted with this lightly followed stock, but so far we like what we see.

Pharmion acquires, develops, and commercializes innovative products for the treatment of hematology and oncology patients in US, Europe, and Asia. The Colorado-based biotech, which maintains a $590M market cap, generated $220M in sales last year. Net income was about $2.3M, the company's first time in the black. In the last 12 months, shares (now at $19.67) have gone as high as $30. We think the stock is down because the company recently announced R&D costs were going to take a bigger bite out of its wallet in '06.

Because large pharmaceutical companies stay away from making drugs that treat small patient populations, specialty drug makers like Pharmion get left behind to seize on underserved markets, where the risks may be high, but the rewards immense. Pharmion has enjoyed great success with its product pipeline, led by Innohep. Innohep is used to treat deep-vein thrombosis (blockage of a vein due to a blood clot). Pharmion also markets Refluda, a treatment for heparin-induced thrombocytopenia type II and thromboembolic disease in adults mandating parenteral antithrombin therapy — an infrequent but potentially life-threatening response to heparin therapy.

As you can see, Pharmion isn't making the next Viagra, Avastin, or Prozac, but that shouldn't turn you off. The firm's top line story is all fireworks: sales went from $25M in 2003 to over $220M in 2005, a 780% gain! While profitability doesn't seem to be this outfit's middle name, it does hold 40% of its market cap in cash. Additionally, Pharmion goes for less than 3 x sales, a discount to the price/sales valuations of most unprofitable, niche-driven biotechs. We just met Pharmion yesterday, but we're already thinking of taking her home.

PHRM 1-yr chart:

Source: Pharmion: The Small Drug Maker That Could (PHRM)