Hemispherx Biopharma: Now What?

Hemispherx Biopharma (HEB – $0.62) announced that it received a complete response letter from the U.S. Food and Drug Administration (“FDA”) which describes specific additional recommendations related to the Ampligen NDA. In accordance with its 2008 “Complete Response” procedure, the FDA reviewers determined that they cannot approve the application in its present form and provided specific recommendations to address the outstanding issues.

Almost a year ago, we featured Hemispherx at 36 cents. We recommended the Company because the FDA accepted for review the Company’s New Drug Application (NDA) for Ampligen to treat Chronic Fatigue Syndrome (CFS). We believed Ampligen has a fair chance of being accepted by the FDA because the Phase III results were all satisfactory. During the double-blinded phase III clinical trial, Ampligen demonstrated medically and statistically significant increases in the primary endpoint (exercise treadmill duration) compared to placebo after a 40-week period.

Furthermore, no significant differences were observed between the two groups (drug vs. placebo) for treatment dropouts, the incidence of serious adverse events, or missed treatment doses. With respect to relative safety of the experimental therapeutic, there were also no significant differences in week forty blood chemistry, hematology, or thyroid function parameters.

As a results we wrote, the stock might become the top percentage gainer for 2009. And it actually did when it hit $4.54, or up 1161% from our recommendation, early June on hopes of Ampligen being approved.

Big was our disappointment on Tuesday, when we read that the FDA stated that the two primary clinical studies submitted with the NDA did not provide credible evidence of efficacy of Ampligen and that the agency recommends at least one additional clinical study which shows a convincing effect.

When you invest in a small biotech company there’s always a possibility of things going wrong. In HEB’s case however, we believed everything pointed into the right direction, and there was only a 1 or 2 percent chance for this outcome. We absolutely didn’t expect this to happen and we’re devastated by it.

Now What?

What’s going to happen with the NDA? That depends on the outcome of the meeting with the FDA, after which we should be able to figure out how bad the situation is.

Of course, we realize there are other aspects about Hemispherx that will undoubtedly give a boost to the Company and its stock price if they’re concluded successfully. For instance, there’s the promising research by Dr. H. Hasegawa of the Japanese National Institute of Infectious Diseases (JIID), to use Ampligen as an influenza vaccine enhancer. But, we all know that’s not the reason why we bought the stock in the first place.


For people who feel that waiting another 3 or 6 or 12 months is too long, we advice to sell your shares. We’re personally going to postpone our decision until after the meeting with the FDA. For the time being we put the shares on hold.

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