It's been a long, and sometimes annoying, battle for Hemispherx BioPharma, Inc. (AMEX:HEB), and it's still not over yet. This biotech company, however, may end up being one of this year's Cinderella stories.
The company's almost-claim to fame is a drug called Ampligen, for the treatment of chronic fatigue syndrome. Hemispherx BioPharma has watched the drug get run through the regulatory wringer a handful of times, with the latest FDA decision effectively saying "feel free to file the NDA again when you think it's actually ready". That was the gist from the February ruling anyway, following the FDA's original response from late 2009.... which didn't outright reject the drug, but gave HEB some clear items to take care of before the next filing. The good news: While the Ampligen story has at times become comical, the Food and Drug Administration hasn't exactly said 'no', or given the company a response that implied it should stop the R&D process before it burns through any more money.
In the meantime, while most eyes were focused on whether or not (and when) Ampligen would win approval, HEB has quietly made meaningful progress that doesn't single-handedly make it investment worthy, but could push hesitant investors over to the bullish side of the fence.
One of those milestones is the approval Alferon - the "other" Hemispherx BioPharma - project - in Argentina. Alferon is a genital warts treatment that's already approved in the United States. It's not clear what the genital wart market is like in Latin America, but given that one of the regions leading countries has given it the green light, odds are good most other countries will follow suit.
And, perhaps it's Alferon with Ampligen rather than flagship Ampligen alone that makes HEB such an interesting idea today.
Biotechnology stocks are a funny and diverse breed. Many of them are one-trick ponies working on the development of one drug. If that drug is approved it could be a blockbuster, but if it's not approved, the company's continued existence is pointless.
Other biotech outfits go to the other extreme, working on anything and everything, but not doing any of them very well due to a lack of focus. These companies burn a lot of money, but end up with nothing revenue-bearing because it couldn't develop anything meaningful.
Hemispherx BioPharma, Inc. is somewhere in the healthy middle, working on a potential blockbuster to treat chronic fatigue syndrome, but also developing something of a cash cow with Alferon. In fact, the market may be entirely missing the boat with Alferon. It is approved in the United States, but the reason it doesn't seem to be positively impacting the company is that it's not being sold yet.
Per last week's 10K filing with the SEC, Hemispherx won't actually begin production of the Alferon injection for any market until the middle of this year. Once it does though, it will become a key player in what's been estimated to be a market worth anywhere from $1 billion to $4 billion on a global basis; the wide range of forecasts underscore the reality that the market for such a product still hasn't really gelled, as many sufferers don't seek treatment.
Still, for the $49 million company that HEB is, even a small piece of that pie would be a big deal. Assuming only a 5% market penetration - which is still reasonable even if only talking about the U.S., where Alfero is approved - of the low-end market estimate of $1 billion still means $50 million in annual revenues for Hemispherx.
No, it's not gangbusters, but the U.S. isn't the only market either. And, it's an under-served market globally.
More important to potential HEB shareholders, the cash driven by even just modest success with could fund (at least partially) the ongoing development of Ampligen, and do away with the need for more fund-raising.... though investors haven't balked so far when the company has asked for more money.
Make no mistake. Ampligen is still the 'big deal', and is still a big question mark. The FDA has given the company all the time it needs though, and considering the chronic fatigue syndrome market is also a multi-billion-dollar market. Like the genital warts market, the lack of convincingly-proven treatment means there is no clear annual 'spend' on CFS, so the specifics are unclear. Again though, even a treatment that works reasonably well for a mere handful of chronic fatigue sufferers could be a game-changer for the company's shareholders.
While there's no timeframe for when the company might file an NDA with the United States' FDA, today's announcement implies it could be soon. Hemispherx BioPharma shared some encouraging data regarding the treatment's success with CFS that leans towards a positive nod with a future FDA filing....and the agency has already tacitly suggested it's looking for ineffective treatment for the debilitating disease. Even with an excessively-eventful past, HEB looks to be a frontrunner in that race, and could be worth a swing.