Pharmaceutical stocks have had a tough year, with landmark ETFs like the PowerShares Dynamic Pharmaceuticals(ETF) (NYSEARCA:PJP) down about 18.7% since January, the iShares Dow Jones US Pharm Indx (ETF) (NYSEARCA:IHE) having lost 12.7%, and the SPDR S&P Pharmaceuticals (ETF) (NYSEARCA:XPH) having plummeted 22.3%. In this context of depressed valuations, some stocks might offer very attractive entry points for long-term investors. So, let’s take a look into two nano-cap stocks in the sector in order to find out if they stand as interesting investment options.
Hemispherx BioPharma, Inc (NYSEMKT:HEB)
Let’s start with Hemispherx BioPharma, Inc (NYSEMKT:HEB), a nano cap specialty pharmaceutical company that has tumbled more than 12.8% year-to-date. However, it seems like it could now be staging a turnaround on the back of a management team reshuffle, a manufacturing facility overhaul (including new bioreactors), and a renewed focus on fiscal transparency and responsibility.
Interestingly, the company’s Ampligen, an experimental RNA nucleic acid treatment for chronic fatigue syndrome/myalgic encephalomyelitis (CFS/ME), “has also shown utility as a broad‐spectrum antiviral that could help seasonal flu vaccines work against highly pathogenic pandemic viruses, Crystal Research Associates pointed out in a recent report. Moreover, the experts added, Ampligen has an orphan drug designation for Ebola in Europe and is undergoing Phase II clinical trials for colorectal and ovarian cancers; the drug has already been approved in Argentina to treat severe cases of ME/CFS, becoming the first drug in the world approved specifically for these indications. Finally, the analysts noted, patents protect the technology through 2028.
Hedge funds long Hemispherx BioPharma, Inc (NYSEMKT:HEB) as of the end of the third quarter included Jim Simons’ Renaissance Technologies, which held 158,152 shares of the company, and Hal Mintz’s Sabby Management, with 1.35 million shares.
Immune Pharmaceuticals Inc (NASDAQ:IMNP)
The other company we’d like to take a look at is Immune Pharmaceuticals Inc (NASDAQ:IMNP). Its stock has shed more than 75% of its value over the year, largely driven by several earnings misses – and in spite of the filing of a provisional patent on the oral use of anti-eotaxin monoclonal antibodies for the treatment of inflammatory diseases of the liver and GI tract, including NASH.
A few days ago, the company announced it had closed an agreement with an institutional investor, under which the latter acquired “a $1 million convertible note and up to $10 million in future equity sales at prevailing market prices in increments of at least $1 million per month.”
Following this announcement, management said that, now counting with guidance from the Food and Drug Administration, the Ceplene Scientific Advisory Board (SAB) “will review the proposed clinical protocol for a pivotal phase 3 Overall Survival clinical study of Ceplene in combination with low dose IL2 in the remission maintenance of patients with Acute Myeloid Leukemia (AML).” Finally, the company will host an Immuno-Oncology R&D Update for investors, next December 8.
As of the last fully reported quarter, Immune Pharmaceuticals Inc (NASDAQ:IMNP) counted on the support of more than a dozen large institutional investors, including Jim Simons’ Renaissance Technologies. The firm disclosed ownership of 152,498 shares as of September 30.
Update: The first paragraph about Immune Pharmaceuticals is updated to give the company’s CEO a chance to respond to certain issues raised in an earlier version of the article.
Disclosures: Small Cap Nation and/or its affiliates have received or will receive compensation from Hemispherx BioPharma. However, this piece is not intended as promotion.
The author, Javier Hasse, holds no interest in any of the securities or entities mentioned above. He has not received compensation for this article, other than from Small Cap Nation. The statements above do not constitute recommendations. The article has been based on publicly available information, and seeks to be unbiased and non-promotional.