Hollis-Eden Anti-Radiation Government Contract Delayed Again

by Andrew Vaino

According to Greek mythology, after displeasing the gods, Sisyphus was consigned to spend eternity rolling a heavy stone up a steep hill and then watching as it rolled back down. He never quite made it to Eden.

I wrote on the weekend about Hollis Eden’s (HEPH) quest to obtain a contract, under Project Bioshield, to supply the Department of Health and Human Services with Neumune to treat acute radiation sickness. The company has been waiting some time now for this contract, and, once again, they announced a delay. One wonders if a segment last year on "60 Minutes", in which Hollis Eden criticized the governement’s action on procuring Neumunne, displeased anyone.

This is now the fourth time the tentative date of this award has been pushed back. In his 2006 letter to shareholders CEO Richard Hollis wrote, in regard to Neumune, "HHS has indicated it plans to make awards under this RFP around June 2006". This was then pushed back to September 30, then to November 30, then to January 31 2007, now to March 7.

As I mentioned, I really don’t think Hollis Eden has a good drug pipeline at all, and decided to try and cash in on "homeland security" issues rather than try and advance a drug to a Phase 3 trial. Despite Hollis Eden’s claims they are the only company seeking this contract I get the feeling no contract will ever materialize. So far the government is proving me right.

As I mentioned, I thought this would be a fun week to trade HEPH: the stock was as high as $5.95 on Monday and has dipped as low as $4.90 so far this morning. HEPH’s chart shows some nice consolidation since dropping substantially after a stock offering last November (they sold $26M worth of stock at $6.50, the stock had been trading as high as $7.49 the day before the sale). 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.

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