The competition to develop novel coroanvirus treatments and vaccines attracts plenty of biotechnology heavyweights and blue-chip pharmaceuticals producers. Not to mention previously anonymous small-cap names, including AIM ImmunoTech (NYSEMKTS:AIM). Up more than five-fold this year, AIM stock proves the potency of being involved in the fight against Covid-19.
Still, AIM is no Gilead Sciences (NASDAQ:GILD) or Moderna (NASDAQ:MRNA). Even with a 477% year-to-date gain, AIM sports a market capitalization of just $101.7 million as of July 17. That doesn’t even begin to paint the picture of the volatility that comes with this micro-cap biotech name. In March, AIM stock moved above $7. On July 15, it closed below $3.
One of the things that has been keeping interest in AIM somewhat strong since that March plunge is that no company has pinned down an effective coronavirus treatment or vaccine. It’s not a stretch to say some ambitious, risk-tolerant investors may be looking at AIM through the lens of the “door’s open, why not AIM?”
Along those lines, AIM notched an impressive gain of almost 9% on volume that was more than six times the daily average on July 15 – a day after it became apparent that Moderna is establishing a credible lead in the coronavirus vaccine competition. That says there are some believes in what AIM is attempting to accomplish in the Covid-19 battle.
Filling a Void
An interesting point about AIM is that management appears aware of the company’s capabilities and limitations. While Gilead, Moderna, and some of the larger players in the coronavirus vaccine fray are working on all-encompassing solutions, AIM is looking to leverage its expertise in specific niches.
AIM’s primary drug is Ampligen, used to combat myalgic encephalomyelitis (ME) and chronic fatigue syndrome (CFS) – ailments that occurred in previous strains of the cornavirus. AIM filed a provisional patent application for using the experimental Ampligen in treating CFS caused by Covid-19.
The U.S. Centers for Disease Control and Prevention (CDC), National Institutes of Health (NIH), and other groups are studying the effects of CFS of post-Covid patients. Some health experts say the virus will trigger a surge in CFS cases, so it’s not a stretch to say AIM may be onto something.
The company also recently signed a clinical trial agreement (CTA) with Roswell Park Comprehensive Cancer Center for a Phase I/IIa clinical trial of Ampligen to combine that drug with interferon alfa-2b in treating cancer patients that are also suffering from Covid-19.
“Based on the the immuno-oncology data of this combination in previous cancer trials, the company hopes for an early innate immune response in cancer patients, while limiting viral replication and preventing transmission to other cells,” according to Clinical Trials Arena.
Bottom Line on AIM Stock
AIM sports a lot of good news/bad news potential. The good news is, Ampligen has already proven credible in fighting CFS and ME, meaning the company has something to stand on with or without the existence of Covid-19.
The bad news is, despite Ampligen being deemed effective in the aforementioned objective, AIM is still a micro-cap stock. Bad news Part II: there’s a lot of coronavirus “noise” priced into this name. That means if Ampligen fails to adequately address CFS in post-Covid patients or another, more effective treatment for that ailment emerges, there’s significant downside risk to AIM stock.
Putting it all together, investors that want to bet on the big dogs in the coronavirus competition ought to steer clear of AIM, but the stock is suitable for active risk takers that are aware of what could ultimately considerable downside issues.
Todd Shriber has been an InvestorPlace contributor since 2014. As of this writing, he did not hold a position in any of the aforementioned securities.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.