This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

How to Trade Hemispherx Even If You Hate the Stock

NEW YORK ( TheStreet) -- Last week, my colleague Adam Feuerstein laid out the fundamental bear case against Hemispherx Biopharma (HEB - Get Report). I, too, believe the FDA will reject Ampligen, the company's drug for chronic fatigue syndrome.

Unlike Feuerstein, I'm a trader of biotech stocks. Hemispherx is a bad investment but the stock remains a good trading opportunity, particularly with an FDA advisory panel for Ampligen scheduled for Dec. 20.

Here are four factors that make Hemispherx an interesting trade over the next three months:

1. Hemispherx is a cult stock, and like all cult stocks, there exists a group of retail investor fanatics who will defend the stock to their death. No counter-argument, no matter how reasonable or factually supported, will be considered. Negative stories about Hemispherx are reasons to buy more Hemispherx. Positive stories about Hemispherx are reasons to buy more Hemispherex. If a cult investor can't afford to buy more Hemispherx, he will work to convince others to buy more Hemispherx. As catalysts like FDA panels or approval decisions dates near, the Hemispherx cultists will become more bullish, his price targets more outlandish. For these reasons, the run-up in cult stocks is often exaggerated.

2. The same Hemispherx trade worked great in 2009, so no reason to expect history won't repeat itself this time around. In the middle of 2009, Hemispherx shares went on a run from 50 cents to more than $4.50 fueled by speculation and hype surrounding the FDA's original review of Ampligen. Good traders remember stocks that trade well -- Hemispherx included. I expect traders to be drooling over another chance at Hemispherx this time around.

3. There are no drugs approved specifically treat chronic fatigue syndrome. Whether or not you believe Ampligen works, Hemispherx will own the market if the drug is approved. That's a big opportunity for a company with a $100 million market value and another reason why bulls are so excited. Traders take advantage of such optimism.

4. Hemispherx has clearly defined timelines for its tradable catalysts. Run-up traders, therefore, have a specific date in which to exit trades safely. FDA is convening an advisory panel for Ampligen on Dec. 20. That means two business days before the panel -- Tues. Dec. 18 -- FDA will release briefing documents for the panel, including the agency's clinical review of Ampligen. This FDA review will have a dramatic effect on Hemispherx's stock price, one direction or the other, as will the panel itself.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
HEB $0.14 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs