The pharmaceutical industry is a competitive one dominated by some huge players, but a small company like Hemispherx Biopharma (NYSEMKT:HEB) can come along with an important drug and add some lift to your portfolio. These smaller companies are always a bit of a risk given their competition, high R&D costs, and the risks of dealing with FDA approval. But HEB is on the verge of releasing a drug that could really send its stock price soaring.
HEB focuses on viral and immune-based acute and chronic disorders; its drugs treat patients with multiple sclerosis and West Nile Virus, along with AIDS, genital warts, hepatitis C, and acute respiratory syndrome. Its newest drug, Ampligen, will treat Chronic Fatigue Syndrome, and has recently completed Phase III studies and will soon file for FDA approval. Given the lack of treatments for this condition, and the CDC's recent emphasis on the need to treat it, the upside of this drug's approval could be enormous. While the long term outlook is uncertain given likely competition and the eventual expiration of the drug patent, this stock could grow by as much as ten times over the next few years.
The risk, of course, is approval. HEB's revenues have been flat the past few years, it's operating at a loss, and R&D costs have been climbing -- so there's not much to recommend this stock without Ampligen. But if you're willing to take a risk, this one could really pay off.
Type of stock: A small biopharmaceutical company on the verge of a potentially lucrative breakout.
Price target: This stock is all about upside, so if you believe, there's no reason not to buy now, while it's trading a little above $2. You can also wait for approval, but you'll need to act quickly and you may miss your chance.
Disclosure: Author holds a position in HEB.
HEB 1-yr chart