Hollis-Eden: May Reorganize Following Contract Cancellation
by Andrew Vaino
I wrote last week that today (March 7th) would be an exciting day for Hollis Eden Pharmaceuticals (HEPH). This was their fourth tentative award date for a contract to provide Neumune as a potential treatment for acute radiation sickness under Project Bioshield.
The stock was trading heavily this morning, reaching nearly $6, on higher than average volume, before crashing below $3.50 in after hours trading. According to a report from Reuters, the government has canceled the RFP on which Hollis Eden had been bidding.
I wrote last week that I'm little impressed by Hollis Eden’s pipeline, and that in my opinion this contract was a "sink or swim" decision for HEPH. I purchased March 7.5 puts (QGQ OU) in anticipation of no contract award.
The next few days will be interesting for Hollis Eden. They raised $26M in a secondary offering in November (one of the reasons I was not confident they would get a contract). They will have to release their 2006 10K by March 16th, and will likely report at least $70M in cash. This gives them money to operate for a couple of years (average annual burn rate over the past few years has been $20M), but they are really going to have to focus on getting something into late stage clinical trials, something they have not excelled at. I would expect some type of "reorganization" in the next few months.
My take is this stock has farther to fall (in my post on February 1st I wrote "Based on my, admittedly limited, chartist skills, I think if this stock closes below $5 in the next couple of days it will drop to the low 4s/high 3s" the stock didn’t close below 5 until today---I didn’t specify a timeframe(!)---we’ll if HEPH makes it back to 4 tomorrow). I think I'll hold off a day or so before selling the puts. If they hold a conference call in conjunction with filing their 10K it will be an interesting one.
RELATED READING:
- Hollis-Eden: Stock Volatility to Precede Contract Announcement
- Government Contract Could Set Hollis-Eden Stock Soaring
- Project BioShield Has Given Biotechs Little Motivation to Protect Americans
- Three Biotech Drugs Have Potential to Treat Polonium-210 Radiation
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I wrote last week that today (March 7th) would be an exciting day for Hollis Eden Pharmaceuticals (HEPH). This was their fourth tentative award date for a contract to provide Neumune as a potential treatment for acute radiation sickness under Project Bioshield.
The stock was trading heavily this morning, reaching nearly $6, on higher than average volume, before crashing below $3.50 in after hours trading. According to a report from Reuters, the government has canceled the RFP on which Hollis Eden had been bidding.
I wrote last week that I'm little impressed by Hollis Eden’s pipeline, and that in my opinion this contract was a "sink or swim" decision for HEPH. I purchased March 7.5 puts (QGQ OU) in anticipation of no contract award.
The next few days will be interesting for Hollis Eden. They raised $26M in a secondary offering in November (one of the reasons I was not confident they would get a contract). They will have to release their 2006 10K by March 16th, and will likely report at least $70M in cash. This gives them money to operate for a couple of years (average annual burn rate over the past few years has been $20M), but they are really going to have to focus on getting something into late stage clinical trials, something they have not excelled at. I would expect some type of "reorganization" in the next few months.
My take is this stock has farther to fall (in my post on February 1st I wrote "Based on my, admittedly limited, chartist skills, I think if this stock closes below $5 in the next couple of days it will drop to the low 4s/high 3s" the stock didn’t close below 5 until today---I didn’t specify a timeframe(!)---we’ll if HEPH makes it back to 4 tomorrow). I think I'll hold off a day or so before selling the puts. If they hold a conference call in conjunction with filing their 10K it will be an interesting one.
RELATED READING:
- Hollis-Eden: Stock Volatility to Precede Contract Announcement
- Government Contract Could Set Hollis-Eden Stock Soaring
- Project BioShield Has Given Biotechs Little Motivation to Protect Americans
- Three Biotech Drugs Have Potential to Treat Polonium-210 Radiation
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posted by Nico at
10:52 PM
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