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Shares of Hemispherx Biopharma, Inc. (NYSEMKT:HEB) rebounded slightly on Wednesday morning after sliding down to near the one dollar mark on Tuesday after it was announced that the company would spend the next two months responding to FDA queries regarding the company's New Drug Application for Ampligen. Ampligen is up for approval as a treatment for Chronic Fatigue Syndrome.

While Ampligen draws the news for Hemispherx at this time, the company also has already received FDA approval for Alferon, an injection that treats a category of sexually transmitted diseases.

Both Ampligen and Alferon are also being evaluated in various early, middle and late stage trials to measure their effectiveness in treating various chronic diseases and viral disorders.

The last time that I commented on HEB, the stock was trading for over two dollars and I thought that buying in for the first time at that point was a little too risky, in addition to my aversion to 'stock chasing', but since the stock has dropped down to the one dollar level I believe in the potential of HEB to become a nice rebound story.

I don't consider an Ampligen approval for CFS as a slam dunk, but I do consider the approval as necessary so that the company could then advance the rest of the clinical pipeline without having to raise significant funds in the future, which would equate to serious dilution, in my opinion.

At this time it is hard to judge when an FDA decision will be rendered, but it's safe to say that if Hemispherx is still responding to inquiries, and will be doing so for the next two months, then we may not see a decision until the middle of 2010.

That being said, the stock could be in for some continued volatility, so I'd buy in a bit while it is trading in the lower-$1 range and then see how it plays out. With manipulation rampant in the sector these days, a dip to below one dollar is not out of the question, but neither is a speculative spike to near two dollars.

As with all speculative stocks, it's a good idea to have already banked some profit and be fully on 'house money' by the time the FDA decision hits; if you've got some 'trading shares' on hand, then try to use them. Sometimes you'll miss out on a run if you've already sold some trading shares into a spike - but that's why you keep your 'base' shares in place, so you don't miss out completely. Conversely, if you've taken some profit during a runup, a subsequent drop in price won't hit you so bad.

All just my opinion, do your own Due Diligence before buying, but I think that HEB could turn out to be a good rebound stock if you've got a mid to long term outlook. For the short to mid term, I wouldn't expect the world out of Ampligen for CFS, but if the other trials prove successful for both Ampligen and Alferon - then HEB could become one winner of a stock.

In short: There's quite a bit of potential upside while the stock is trading for near a dollar, but don't rule out another dip to below a buck - especially if the biotech pullback continues.

Disclosure: No position.

Source: Hemispherx Biopharma Could Become a Nice Rebound Story