Rebound or Brick? Hemispherx Biopharma Print E-mail
By Vinny Cassano   
Wednesday, 04 November 2009 16:31
Shares of Hemispherx BioPharma, Inc (AMEX:HEB) rebounded slightly on Wednesday morning after sliding down to near the $1 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 there is potential for HEB to become a nice rebound play.

I don't consider an Ampligen approval for CFS a slam dunk, but I do consider the approval as "necessary" to the company's survival in the sense that if they got a positive nod, HEB could then advance the rest of their clinical pipeline without having to raise significant funds. That would likely mean vicious dilution, in my opinion.

It's 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, so a decision some time in middle of 2010 is not out of the question.

The stock could be in for some continued volatility, so I'd buy a few shares while it is trading in the lower $1 range, 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 as hard.

All just my opinion, of course. Do your own DD before buying.

Disclosure: No Positions
Vinny Cassano also authors the popular stock investing web site VFC's Stock House.




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