Small Biopharma Ponderings

by: VFC's Stock House

Shares of Oncothyreon (ONTY) are once again trading near the four dollar level as the company's partner, Merck KGaA (NYSE:MRK), advances Stimuvax through multiple late stage trials.

Stimuvax, a cancer immunotherapy treatment, better known as a cancer vaccine, is currently being tested for effectiveness in the treatment of non-small cell lung cancer and breast cancer.

I've labeled the company as one of a few that could very well prove to be the next Dendreon (NASDAQ:DNDN) and although I'd rather buy the stock for closer to three dollars, I believe that anything below five dollars is well worth the risk of the speculative investment that could potentially take off on any good news from the ongoing trials.

Even without significant news being released, shares of Oncothyreon could move higher depending on what goes on with other cancer vaccine companies such as Dendreon (DNDN) or Antigenics (NASDAQ:AGEN).

Dendreon, as most already know, is the company closest to bringing a cancer vaccine to market in the US after its flagship prostate cancer treatment, Provenge, proved successful at extending the lives of patients in a Phase III trial while Antigenics has received approval for its kidney cancer vaccine Oncophage in Russia and awaits approval in Europe. Approval news from either should propel all cancer vaccine stocks higher as it would be an indication that the immunotherapy treatment is becoming generally accepted in the medical community.

Oncothyreon will not approach Dendreon's 2.5 billion market cap any time soon, but it could approach Antigenics' market cap of roughly 150 million, a double from current levels.

With Dendreon already popped, AGEN and ONTY are my big two cancer vaccine stocks that I think are most primed for a pop and accumulation at current levels is, in my opinion, a wise move for those bullish on the immunotherapy treatment.

As DNDN has already demonstrated, when these stocks move, they can move big and you want to be in before the run rather than trying to chase the run after it has already commenced.


I've gotten a few emails from readers looking for my take on Hemispherx Biopharma (NYSEMKT:HEB) so I decided to comment on the stock this week. I'm not a shareholder of HEB and I don't plan on becoming one, although I won't deny that the stock does hold some potential.

First of all, I've already missed out on a big run from HEB and I don't necessarily like buying into new stocks after they've already had a big run. I call that chasing and I don't like chasing stocks. If I'm already a shareholder of a stock that goes on a big run (AGEN, for example), then I may add that stock at the higher prices because I've already made money from the stock and I already have a pre-decided exit strategy from the investment.

Additionally, I think that HEB is trading on a lot of flu vaccine hype right now, adding to the recent volatility of the stock.

However, the stock does hold significant potential. If the FDA approves Ampligen for chronic fatigue syndrome. (I'm not sure, even that I see it as likely, that another spike in price would be warranted, but the approval is no slam dunk. It's also not a slam dunk that Hemispherx will benefit from all the flu-vaccine money getting thrown around right now.)

In short, VFC's take is pretty simple:

HEB is a risky proposition right now (as are all small biopharma companies) but it also holds a great deal of potential. For me, personally, I like finding these things while they are trading for below a dollar, not after they have already had a big run. The risk-reward profile for HEB, while trading for over two bucks, is not tempting right now for me because if Ampligen does not gain that approval and the flu potential collapses, the short-term could get pretty ugly for the stock.

However, if it drops below two dollars then I may re-evaluate. For right now I am going to pass on HEB.

If it pops to five tomorrow then you can all make fun of me.

Disclosure: VFC is long ONTY, AGEN and has no position in DNDN or HEB.