Soligenix Poses Raytheon Like Potential

Sep.20.13 | About: Soligenix, Inc. (SNGX)

(Editors' Note: This article covers a micro-cap stock. Please be aware of the risks associated with these stocks.)

In my last article on Soligenix (OTCQB:SNGX) I took a look at the company's predominantly orphan/fast track granted pipeline, upcoming catalysts and insider buying, to make a case as to why I felt the company showed significant near-term growth potential. Since first covering Soligenix in June, analysts have also jumped on board with Zacks Investment Research issuing the company a $4.50 price target and just yesterday Brean Capital assigning the company a $5.00 price target. Although Wall Street analysts are catching on to the growth potential offered by Soligenix, the company is still drastically undervalued in my opinion and poses a window of opportunity for investors to get in on the ground floor of what could become a future Raytheon (NYSE:RTN) type biotech.

BARDA Contract

This Thursday Soligenix announced that the company was just awarded a new government contract by BARDA for up to $26.3M to move forward in developing its bio-defense therapeutic Orbeshield™. This news was a huge win for the company, as it will now likely have full funding to bring this therapy to market as long as the treatment continues to meet targeted milestones. The purpose of Orbeshield™ is to treat damage done to the gastro-intestinal system caused by radiation from a potential nuclear weapon. This is a concern for all governments/humans alike and is one of four programs underway at Soligenix aiming to provide governments around the world with stockpile treatments for war and terrorist threats such as nuclear attacks, anthrax attacks, ricin toxin and Meliodosis. Soligenix's recent BARDA award is significant not only due to the fact that it is for up to $26.3M, but also because currently there are no FDA approved products for treating radiation damage from nuclear weapons and/or nuclear technologies.

Biodefense Vaccine Market

Being that Soligenix's bio-defense vaccines and therapeutics are addressing unpredictable events, which require immediate action by governments, the company's business model encompasses a stockpiling program in which countries are able to buy multi-year minimum procurement orders to stockpile in case of a bio-threat/attack. The minimum treatment procurement orders currently set in place by Soligenix are as follows:

Treatment: Minimum Procurement Order: Cost:
Orbeshield™ (Nuclear Attack) 3 Years $450M
VeloThrax™ (Anthrax) 4 Years $500M
Rivax (Ricin Toxin) 3 Years $200M
SGX943/SGX101 (Meliodosis) N/A N/A
Click to enlarge

Considering that there are 196 countries in existence currently, 193 of which are registered with the United Nations, just one order for any of Soligenix's bio-defense treatments would generate hundreds of millions of dollars in revenue for the company instantly. In theory, if just one country chose to buy each of Soligenix's bio-threat vaccines/therapeutics, then that would generate $1,150,00,000 in revenue.

SGX94 Orphan Grant

As well as this week's BARDA grant, Soligenix was also notified this week that the FDA has granted its SGX94 innate defense regulator orphan status. This is a meaningful award for the company since SGX94 is the company's main ingredient in treating Acute Radiation Syndrome and has been shown to accelerate healing of tissue damage resulting from radiation, bacteria, trauma and chemotherapy. Whether the company plans to utilize this orphan status to initiate new clinical trials or license its utilization out to other companies for certain trials is unknown yet, but what is certain is that the orphan designation will provide financial and FDA regulatory benefits for the company's treatments using this compound.

Conclusion

For the duration of the year numerous catalysts remain in store for Soligenix. In terms of the company's disease pipeline it plans to start its Phase II/III trial for Pediatric Crohn's disease, its Phase II trial for Oral Mucositis in Head and Neck Cancer and its Phase II trial for Chronic Graft versus Host Disease. Likewise, for the company's bio-defense division Soligenix expects first year stability data from its ThermoVax™ vaccine stability platform, animal data from the company's anthrax vaccine and potential further grant or contract awards at anytime. While like all biotech companies there is no guarantee that certain therapies will make it to market, if Soligenix delivers just a fraction of what it has in its pipeline, it could move on to become a major government bio-defense contractor with Raytheon like potential.

Disclosure: I am long OTCQB:SNGX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.