Special Report: Pending FDA Decision for Hemispherx (AMEX:HEB)

What is going on with Hemispherx Biopharma?  To casual observers, that is the big head scratcher.

Such a mystery, in fact, that the company was contacted by NYSE Amex officials and asked if Hemispherx might issue a public statement indicating as to whether there are any corporate developments which might explain the unusually high level of trading activity for the stock.

Indeed, many wondered why, in the past two trading sessions, the price per share for the company has doubled, without any of the oft discussed "apparent material events."

The stock ended the day on Monday up another 48% and is currently trading at $2.10 per share after hours (as this story is posted).

To say that insiders at the company are excited about the drug's chances for approval three months after a PDUFA decision date was delayed is an understatement.  Their journey has been long and difficult.

Earlier in the year, the original FDA decision date had been announced as 2/18/09, but then suddenly that was delayed because additional data was submitted by HEB within three months of original decision date.  When the delay was announced, there was a sell off  that took the stock price from about $0.80 per share down to nearly $0.40. Some investors wondered if the company was heading down the same rocky road they had been down before with Ampligen.

Ampligen was first synthesized in the 1970s and has been proposed and tested as a treatment for many illnesses, but primarily chronic fatigue syndrome and acquired immunodeficiency syndrome.

Ampligen was developed after Merck & Co. (NYSE: MRK), in the 1960s, synthesized a double-stranded RNA compound composed of inosinic and cytidylic acid residues inhibited tumor growth by inducing interferon production.  In the mid-1970s, Dr. William A. Carter, a post-doctoral researcher at Johns Hopkins University, modified the dsRNA molecule by adding uridylic acid molecules at specific interval along the RNA chain. The new compound, called Ampligen (for AMPLIfied GENetic activity) stimulated interferon production like poly I:C, but was less toxic.

Carter originally founded a company, HEM Research, Inc., based upon the compound and licensed it from Johns Hopkins. By the late 1980s, Carter and his company were pursuing other human therapeutic uses for Ampligen, as well as non-therapeutic uses, such as diagnostic testing for HIV and protecting plants from pathogens.

Ampligen was tested in clinical trials beginning in 1988, after DuPont invested $30 million in Hemispherx. Initial success in a small trial for AIDS treatment was followed by difficulties in persuading the FDA to permit large scale trials. By 1991, it was thought that the chance of approval for a large trial being conducted in the USA had gone. Hemispherx then began to move clinical trials to Canada and Belgium.

In Belgium, Ampligen has been available for use since the drug's trial beginning in May 1996. It has also been available under Canada's Emergency Drug Release Program for both Chronic Fatigue Syndrome (CFS) and HIV treatment since 1996, with marketing rights controlled by Biovail Corporation International.

Over its developmental history, Ampligen has received various designations, including “orphan drug product” and “emergency compassionate cost recovery sales authorization” both from the FDA and "promising" clinical outcome recognition based on the evaluation of certain summary clinical reports (AHRQ, Agency Health Research Quality).

On December 3, 2007, the FDA deemed the new drug application submitted by the company on October 10, 2007 to be incomplete. Specifically eleven deficiencies were noted in the Clinical Section and three in the Pre-Clinical Section.

Continuing down the rocky road, Hemispherx management had missed several target deadlines for new drug application (NDA) filing in the past, including the end of 2005, the third quarter of 2006, and the first quarter of the year 2007.

According to published sources, in October 2007, the US Food and Drug Administration (FDA) Ampligen NDA was filed, marketing for the treatment of CFS now hangs in the balance. This time around, the company was not going to take any chances. They have submitted plenty of positive data and spirits are high within the company that the approval will come. Some institutional investors like their chances as well. In the past few days, the company got an injection of capital from them for the continuing development of the drug. "We've signed to obtain an $18.3 million investment from some institutional shareholders," said Dr. Carter during an interview on Friday. "We also have a $28 million credit line with Fusion Capital."

Carter says the company is looking at a strong balance sheet which provides HEB with some level of guarantee towards multiple years of operation (at least 4 or 5 years according to Carter).

"Of course, we do have a commercial product that is already on the market (Alferon N Injection® ), we plan to expand its sales, so we see a very healthy future for the company and a healthy financial balance sheet- even in the event that the secondary approval is delayed, which by the way is not our expectation."

Dr. Carter, generally considered to be a pioneer in Interferons (IFNs are natural cell-signaling proteins produced by the cells of the immune system) and their Pharmaceutical uses. There are some 30 or so diseases in which Interferon therapy is now the treatment of choice and it captures about $7 billion a year.

"Our Ampligen product is pending FDA approval as a mono therapy for Chronic Fatigue Syndrome which affects 4 million Americans, potentially up to 6 million and there are no other drugs on the market for this disease."

In addition, Ampligen is of global importance given it's application for viral diseases and disorders of the immune system including HPV, HIV, Hepatitis and influenza. Hand in hand with the government of Japan, the company is conducting trials showing very positive results for the drug as a booster treatment for influenza in the vaccine space.

More recently, the FDA had requested additional information from the animal studies for Ampligen.

"We have completed the animal studies that were requested by the agency (FDA)," explains Dr. Carter. "And we have produced an initial report of the studies and are now in the process of submitting final reports, but we've already given the conclusions to the agency. "

Chronic Fatigue Syndrome, whose symptoms include widespread muscle and joint pain, cognitive difficulties, chronic, often severe mental and physical exhaustion and other characteristic symptoms in a previously healthy and active person, was largely considered psychosomatic until studies began to prove otherwise. Recently published papers indicate the problem may have it's origins at the genetic level.

"This is a disease that actually involves the genetic machinery, and specifically the machinery involved in mounting an immunological response  and also a gene that is involved in energy metabolism," explains Dr. Carter. "We now have a finger print test which can be applied (which didn't exist three or four years ago) and can identify patients at risk. So there has been a sea change in our understanding about the disease."

The Centers for Disease control recently asked Hemispherx to begin collaborating directly with them when it comes to CFS.

"We're very pleased that shortly we'll be working directly with the CDC to better understand the disease and of course specifically on how to take this experimental treatment and ultimately make it the first standard of care for these patients who are so sick." says Dr. Carter.

Ampligen is received intravenously.  It is generally administered twice weekly for periods of one year or greater. Two toxicology studies were recently completed that establish the safety of intranasal and intramucosal methods of Ampligen administration.

The drug has a PDUFA decision date of 5/25/09. (Note, the decison could come earlier or later than anticipated due to the fact that this date falls upon the Memorial Day holiday and the markets will be closed).

(Micheal Vlaicu, a Toronto based analyst of StocksHaven.Com and guest writer at BioMedReports contributed to this article. A full audio interview with Dr. Carter can be heard here).

BiomedReports is not paid or compensated to report news and developments about publicly traded companies. Full disclosure can be read in the About Us Section

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