HEB

HEB message boards are gettings tons of chatter, most of it garbage, but it's usually emblematic of a pivotal inflection point in the share price, either up or down. Longs are expecting FDA approval of Ampligen for treatment of Chronic Fatigue Syndrome (CFS), a recently diagnosed debilitating medical condition. Patients and doctors swear by Ampligen's efficacy, despite the disease being marginalized in the past by the mainstream medical community. Now that CFS is recognized by the FDA, Ampligen's approval as an orphan drug (there are no other CFS treatments approved simply because CFS wasn't formally recognized as a disease) should be a blockbuster, according to long investors.

Ampligen has also been deemed effective as an adjuvant to flu vaccines in Japan and other countries, so the share price has spiked up in the last month from depressed levels. It has also been effective in clinical trials for boosting the efficacy of cancer vaccines in clinical trials. As Dr. William Carter, CEO of HEB stated in an interview last night, which is causing the uproar: "We have multiple shots on goal." See the June 4 blog on the swine flu.

Doubters (and shorts) will point to HEB's checkered history of FDA non-approvals and share dilution (altho HEB does already have one commercially approved drug for Alferon).

The pumping and bashing will continue unabated over the weekend, and the old adage "volume before price" will inevitably be proven again, as HEB will continue its high price volatility going into Monday.

HEB is a risky and volatile play. Do your due diligence. This is not a recommendation.

Disclosure: I am long HEB.

Swine flu revisited

In the bad news, good news category:

Bad news first: the swine is spreading rapidly, despite declining media coverage.

Good news: my two swine flu plays are doing well.

HEB has a history of FDA non-approvals, but is expecting a PDUFA decision from the FDA any day now, for approval of treatment for Chronic Fatigue Syndrome (CFS). CFS's acknowledgment as an official indication itself is controversial, and thus there are no current approved treatments for it. That's why HEB's Ampligen has so much potential, as patients and doctors in clinical trials swear by it. After being barely able to function, some patients on Ampligen have their lives restored.

But Ampligen is also being reviewed in Japan, Italy, and Australia (among other countries) for use as an adjuvant with vaccines to combat season flu, avian flu, and swine flu. Apparently, Ampligen in conjunction with other vaccines shows clinically significant efficacy.

I have sold 40% of my HEB holdings, locking up to 100% gains, and letting the rest ride in case they get approval for CFS. Any orders from the increasing threat of rising flu cases will provide further upside in the price per share.

BCRX is developing an anti-viral (vs. a vaccine) which shows efficacy in reducing symptoms for those with severe flu symptoms. Roche's Tamiflu is largely ineffective against some mutated influenza strains and GSK's Relenza has also been marginalized against resistant strains. BCRX's Peramivir intravenous dosage has been so effective against multiple flu strains in clinical trials that they are being evaluated for Emergency Use Authorization (EUA) despite not being FDA-approved (currently Phase II).

In Japan, they are in Phase III with fast-track approval targeted for 2010. Shionogi, their marketing partner, is working furiously to get approval in China, South Korea, Taiwan, and Hong Kong as well. East Asian countries are far more sensitive to influenza due to close living quarters and an aging population in Japan, which increases mortality and morbidity.

I believe WHO will raise the pandemic alert to Phase 6--the highest level soon. Despite the swine flu's rapid spread, confirmed cases are being under-reported for various reasons, whether political or just lack of testing facilities. For now, the H1N1 virus has been proven virulent, if not as lethal as its avian flu cousin (H5N1). But if they somehow mutate these winter seasons in the southern hemisphere, and then later in the northern hemisphere, we could have a strain that is both virulent AND lethal.

These are highly speculative investments, and these are not recommendations. Please do your own due diligence.

Disclosure: I am long BCRX and HEB.