Humanigen Inc (OTCMKTS:HGEN) Oversold And Due For A Bounce

Humanigen Inc. (OTCMKTS:HGEN), the bio pharmaceutical company, has gone through many corporate changes and released good news after we published "Life After Martin Shkreli For KaloBios Pharmaceuticals Inc (OTCMKTS:KBIO)". The changes included name and ticker symbol change, the election of a new CFO, a Common Stock Purchase Agreement with Aperture Healthcare Ventures Ltd., and some news from the FDA, among others. The news were good, but could not change the direction of the downward trend that commenced in the beginning of the year; have a look: 1 year chart for HGENWill the downward trend continue or will the marker regain confidence in the company? We will try to answer this big question in this piece.BusinessAccording to company materials, it focuses "on developing medicines for patients with neglected and rare diseases, with an ancillary focus on pediatric conditions." The most interesting candidate is benznidazole, which serves for the treatment of the Chagas disease; "a parasitic illness that can lead to long-term heart, intestinal and neurological problems" At which stage is the R&D work of benznidazole?The company acquired rights to develop the drug on June 30, 2016. In December 2016, it was noted that the drug was eligible for review pursuant to a 505(b)(2) regulatory pathway as a potential treatment for Chagas disease. Additionally, on July 10, 2017, the FDA granted Orphan Drug Designation to benznidazole.Recent DevelopmentsOn August 7, 2017, the company changed its name from KaloBios Pharmaceuticals, Inc. to Humanigen, Inc. Additionally, the trading ticker also changed from “KBIO” to “HGEN”. In our opinion, the changes were made to erase any reference to former CEO Martin Shkreli. His recent conviction and prior actions cast a cloud over the company.On August 11, 2017, Dr. Cameron, who is also the CEO and Chairman, decided to replace the CFO. The new CFO was appointed very fast. On August 28, 2017, the company appointed Greg Jester as the new Chief Financial Officer of the Company. He will assume the appointment on September 5, 2017. He seems prepared to take the role, as he has worked in other pharma companies always focusing on the financing. Have a look:

"Prior to joining the Company, Mr. Jester, age 50 , served as Vice President, Finance, for Tris Pharma, Inc., a specialty pharmaceutical company, from May 2015 to August 2017. From August 2014 to May 2015, Mr. Jester served as interim controller for Virtus Pharmaceuticals, LLC, a $40 million generic pharmaceutical company. He also served as a financial consultant to Cormedix, Inc., a publicly traded commercial drug device company, from March 2014 to August 2014. Mr. Jester has held CFO roles at numerous private and publicly-owned pharmaceutical companies, including Alvogen Group Inc. and Innovive Pharmaceuticals, Inc. Mr. Jester holds a Bachelor of Science in business administration from the University of Richmond." Source

On August 24, 2017, the company noted that it had signed a Common Stock Purchase Agreement with Aperture Healthcare Ventures Ltd., wherein it is stated that Aperture may purchase (there are certain conditions) up to $15.0 million worth newly issued shares over the 36-month term. We believe that the agreement shows that there may be an increase in demand for HGEN's common stock.Finally, on August 29, 2017, the FDA released the following text regarding the benznidazole therapy. We need to be alert as the company will have to issue an update on the new strategic direction, which may move the share price quite a bit. Have a look:

"The U.S. Food and Drug Administration announced that it had granted accelerated approval of a benznidazole therapy manufactured by another company for the treatment of Chagas disease, and had awarded the other manufacturer a tropical disease priority review voucher. As a result of FDA’s actions and with the information currently available, Humanigen, Inc. no longer expects to be eligible to receive a PRV with its own benznidazole candidate for the treatment of Chagas disease." Source

ConclusionHGEN released a large amount of news this summer that included the change of the CFO, as well as a name and ticker change. In our opinion, these changes will help the company turn the page and start fresh. We could see the initial results as Aperture Healthcare Ventures Ltd. decided to purchase shares of the company and signed a new Common Stock Purchase Agreement. Finally, we saw that HGEN received news from the FDA that would require the company make a decision regarding its benznidazole candidate. We will need to be alert, as the announcement regarding this matter will have a big impact on the share price.We will be updating our subscribers as soon as we know more. For the latest updates on HGEN, sign up below!Image courtesy of Ed Uthman via FlickrDisclosure: We have no position in HGEN and have not been compensated for this article.