Blood Sub or Not, Northfield's a Negative

Updated from 6:59 a.m. EST

I've received a good bit of email lately asking my opinion on Northfield Laboratories(NFLD) and its experimental human blood substitute Polyheme. The interest in Northfield was sparked by the company's Dec. 20 announcement that the FDA would review Polyheme for approval with a decision date set for April 30.

Northfield shares jumped from about 40 cents prior to the FDA announcement to more than $1. The stock closed Wednesday's trading session down 5.8% at 98 cents. Clearly, there's a contingent of retail investors out there who believe that the FDA, by accepting the Polyheme application for review, is signaling a willingness to approve the blood substitute despite its checkered history.

I wouldn't make that assumption at all. In fact, Polyheme has very little chance of being approved, in my opinion. This is not a stock I'd chase.

Northfield is trying to win a race to get the first human blood substitute approved where other companies like Biopure(BPUR) and Baxter(BAX) have failed previously.

It's been two years since Northfield first announced the failure of the phase III Polyheme study, but recall that the death rate for trauma patients treated with Polyheme was over 13% compared to a death rate of just under 10% for patients treated with saline and blood.

Scarier was the study's safety data, which went against Polyheme in every way measured. Patients treated with Polyheme reported more serious adverse events, more heart attacks and greater risks to the kidneys than the control patients.

Polyheme's fans tend to ignore the blood sub's dangerous safety profile and rationalize an FDA approval on the belief that Polyheme is the only thing that can save the life of a severely injured and bleeding patient when blood is not available.