Hemispherx's Ampligen Returns From The Brink Print E-mail
By Brian Wilson, Lead Contributor   
Tuesday, 27 November 2012 09:33
Hemispherx BioPharma (NYSE: HEB) was one of the great rebound stories of the biotech sector this year due to the enormous rally in the stock that started in July and peaked in September. The excitement began after the company announced that an agreement was made with the FDA regarding the filing requirements for the New Drug Application (NDA) of their product Ampligen (rintatolimod) – a treatment for chronic fatigue syndrome.

Going all the way back to the completely response letter (CRL) that Hemispherx received in 2009 that rejected the first NDA application submitted for Ampligen, recall that the FDA recommended at least one additional study of Ampligen in CFS to further explore its effect on patients. The market was quick to dismiss Hemispherx due to the shock of the rejection and the annoyance of having to wait for another phase III clinical trial (shown clearly by the doubling and halving of HEB that year.) Making things worse were the investor lawsuits that were looking to nail Hemispherx for false and misleading statements in company press releases leading up to the FDA rejection of Ampligen's FDA.

Saying that HEB was an unpopular stock in the years following the disaster in 2009 is an understatement, but the company's situation has improved dramatically this year.

According to the recent press releases by Hemispherx, the second study (known as the AMP-516 trial) showed lower use of concomitant medications in the Ampligen arm relative to placebo, and also lowered their use of medications that are known to prolong something known as the “QT interval.” The QT interval is a time measurement in patients' heart rhythms, and any medications that actually prolong it are associated with increased risk of the development of cardiac arrhythmia and increased likelihood of adverse cardiac events. The extra data provided by the study was certainly positive, and allowed Hemispherx to convince the FDA to accept the old Hemispherx NDA with that addition of the new clinical trial data that has addressed the issues that were brought up in the CRL from over three years ago.

After its lengthy period as an unexciting biotech penny stock which had the negative overhang of an NDA rejection, Hemispherx stock has been moving up again on the decent results of the AMP-516 trial and the increased likelihood of an FDA approval of Ampligen in the near future.

The significant unmet demand for chronic fatigue syndrome is one factor that can buoy HEB as well. There are at least 1 million adults in the United States that have chronic fatigue, which implies enormous sales revenue potential due to the lack of competition and the sheer size of the patient population that could benefit from Ampligen.

Investors also note that the company has another product Alferon N which is a naturally derived interferon that was FDA approved (a long time ago) for the treatment of HPV/genital warts. Alferon N has not been particularly profitable up to this point, although Hemispherx should be able to reduce  long-term cost of goods sold (COGS) dramatically after the completion of a new manufacturing facility, which has cost the company about $5.7 million up to the point.

Due to its dramatic return from the dead, it's still clear that Ampligen (not Alferon) is the underlying cause of outperformance in HEB. Investors should note that the new NDA contains data from the AMP-516 trial which should address the concerns brought up in the CRL from 2009. The PDUFA action date (the date of potential FDA approval of Ampligen) is February 2, 2013 and there is an Arthritis Advisory Committee meeting scheduled for December 20, 2012 that will discuss the new Ampligen NDA. The upcoming advisory committee meeting will also end in a vote on the NDA, and it will provide the market with an early guess on the likelihood of approval of the Ampligen NDA in February. If the vote is heavily skewed in one direction (either for or against approval), the market will likely react as if this were the FDA decision. A very favorable vote that solidifies the chances of Ampligen's approval could possibly bring the stock to 2009's highs due to the removal of a great deal of uncertainty while the opposite would surely erase the year's gains or worse. Trade accordingly.




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