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Immunotherapy Biotech Poised to Soar

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Game-changing products and a strong balance sheet position Hemispherx Biopharma for possible market-beating gains.

There's a medical revolution happening and it's one that will help conquer some of humankind's most dreaded diseases. The revolution is called immunotherapy.

Immunotherapy is one of the hottest areas of biotechnology science. The method entails leveraging the human body's defenses to fight invading diseases. The tenet behind immunotherapy is that the body is its own best defender.

Big Pharma is pouring billions of dollars into the field, with the aim of developing treatments that can address maladies that have been resistant to conventional drugs and therapies.

While immunotherapy is an exciting area for investing, the blue-chip biopharmaceutical companies are mega-caps with only limited room for growth. They're rushing into immunotherapy to fend off the revenue cliff they face when patents for their blockbusters expire. Capital appreciation of double digits or higher is elusive for these behemoths.

That's why a certain small biotech in the immunotherapy space looks particularly appealing right now.

Philadelphia-based bio Hemispherx Biopharma (NYSE: HEB) is an under-the-radar, entrepreneurial biotech that's making inroads within immunotherapy. With a market cap of $10 million, the company is a small fry that doesn't get much attention on financial television. But small caps are poised for outsized gains over the next 12 months, especially if the Republican tax plan is approved. Small companies receive many generous breaks in the bill.

HEB's drug therapies are predicated on boosting the natural immune system for the treatment of viral and immune-based chronic disorders.

Conventional prescription drugs are typically made by combining chemical ingredients. A major impetus behind immunological development is the stampede to cure rare and hard-to-treat diseases. The winners in the immunotherapy space will prove superb long-term investments.

Immunotherapy treatment can complement but often supplants chemotherapy and radiotherapy, both of which entail unpleasant side effects. In effect, immunotherapy pursues the age-old medical dream of allowing the body to be its own physician.

Poised to Treat a Broad Spectrum of Diseases

Hemispherx Biopharma is not new to the biopharma space. Their approved products include: Ampligen, Alferon LDO, and Alferon N Injection,.

Ampligen, was developed for the treatment of chronic fatigue syndrome (CFS). The drug is approved for sale in Argentina for the treatment of CFS. The company is using the country as a springboard to obtain approval in the European Union.

Other applications for Ampligen include the treatment of Hepatitis B, HIV, renal cell carcinoma, and malignant melanoma.

Alferon LDO, is a low-dose oral liquid formulation of natural alpha interferon for the treatment of pandemic and seasonal influenza.

Alferon N Injection, an injectable formulation of natural alpha interferon to treat sexually transmitted disease infections, including reoccurring genital warts, which is the most prevalent sexually transmitted disease. Studies show that 54% of Alferon N treated patients had a complete response of all treated warts.

Genital warts cause enormous physical discomfort, including pain, bleeding and itching, as well as psychological distress. The disease's high recurrence rate fuels higher medical costs; Afleron N can help contain those costs. Hemispherx is seeking a manufacturing partner for this treatment, which is tapping a market with an estimated worth of $92 million.

These flagship platforms help calibrate the immune system, functioning as triggers of the immune response. They have great potential in targeting major unmet medical needs in infectious disease, immune dysfunction and cancers.

Solid Balance Sheet

Investors right now are seeking outsized growth opportunities with enough momentum to weather the storms we'll inevitably encounter in 2018. Market watchers are fretting over a host of potential dangers that could initiate a correction in stocks, including gridlock in Washington, DC and rising geopolitical risks.

Biotech has always been a volatile sector for investors. While companies' shares can quickly soar by the triple digits, there are just as many stocks that have fallen, losing as much as half of their value at the slightest hint of bad news. One of the keys to smart biotech investing is the balance sheet.

When it comes to debt, Hemispherx Biopharma takes a conservative approach. The company boasts a solid balance sheet. In an industry known for high debt, HEB's total debt to equity ratio (most recent quarter) is a low 5.00.

Prudent investors also look for a company that generates at least three times its interest payments. HEB is reassuring on this score as well, with interest covered by earnings at a comfortable ratio of 320.68x.

The company's financial flexibility allows it to devote ample resources to research and development and invest in organic growth. The company's high liquidity should allow it to weather any bumps in the road, such as the long-awaited stock market correction.

HEB is enjoying momentum that appears sustainable. The company has achieved quarterly revenue growth on a year-over-year basis of 1,320%.

Hemispherx owns and operates a 43,000-square-foot drug manufacturing facility in New Brunswick, New Jersey that it continues to upgrade. Recent improvements include $8 million worth of state-of-the-art equipment, including a new bioreactor, in preparation for an FDA Pre-Approval Inspection.

Small, Emerging Companies are Key to Biopharma Growth

The race is on for new sources of growth in the bio-pharmaceutical industry, as blockbuster drugs lose patent protection and competitors join forces to cut costs.

A flood of patent expirations continues to shake up the drug industry, spawning consolidation among the biggest players as they seek economies of scale. The future winners will be research-intensive companies with the strongest drug development pipe-lines and the most innovative treat-ments. On these aspects, little-known Hemispherx stands out.

With leading-edge immunology treatments in development, this small company should tap long-term growth while its peers struggle with the headwinds of patent expirations and government cost-containment.

Ordinarily, investors should be wary of penny stocks, but this one boasts solid fundamentals and strong products. HEB currently trades at 32 cents per share. The average analyst expectation of a one-year price target for the stock is $11.52.


This article was written by Luke Douglas for on .

This article published in collaboration with Scutify, the best app for traders and investors. Download the Scutify iOS App, the Scutify Android App or visit Scutify.com.

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