Hemispherx Cops to Ampligen FDA Delay - TheStreet

Hemispherx Cops to Ampligen FDA Delay

Disclosure raises questions about the veracity of CEO's past statements.
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Clarification: Feuerstein's use of the phrase "not complete" was meant to describe Hemispherx's New Drug Application as being "not complete for purposes of obtaining a final FDA approval" in 2009. The phrase did not mean that the NDA was not complete for purposes of initial filing with the FDA, which occurred in July 2008.

PHILADELPHIA, Pa. (

TheStreet

) --

Hemispherx Biopharma

(HEB)

issued an "update" to the regulatory status of its chronic fatigue syndrome drug Ampligen in which the company essentially admits that its prior public statements were false and misleading.

Monday's statement was likely crafted by Hemispherx's lawyers as a way to help CEO Bill Carter wiggle out of public statements he made in May and June claiming the Ampligen application to the

U.S. Food and Drug Administration

to be complete. Carter insisted regulators weren't asking for any additional information on Ampligen.

Carter's made these statements both before and immediately after the FDA approval decision date for Ampligen on May 25, which came and went without any word from the agency. We now know that Carter's statements were demonstrably false. The FDA application for Ampligen was not complete because several items were outstanding, the company now states. These included FDA requests for data on Ampligen's safety both in humans and animals. The FDA also required additional information about Ampligen's manufacturing.

In its Monday update, Hemispherx said it is still compiling all the data requested by FDA and will not be done until December.

Hemispherx also claims Monday that the company properly disclosed the incomplete nature of the Ampligen FDA application in its filings to the

Securities and Exchange Commission

during the relevant time period.

What the company's lawyers don't or can't explain, however, is why Carter was telling investors that the Ampligen FDA filing was complete and on track while the company's SEC filings were stating the total opposite.

The discrepancy is particularly relevant because Carter's public statements helped boost Hemispherx's stock price during the spring and early summer months and benefited the company when it went to raise money from investors.

Between May and early June, Hemispherx's stock price rose about 600%, reaching a high of $3.75 on June 4. The company raised $18 million on May 11, and another $16 million on May 19, right before the FDA was supposedly going to issue its approval decision for Ampligen.

Hemispherx's stock price continues to slide as the Ampligen regulatory delay drags on. The stock closed Monday at $1.33, down 65% from the June 4 closing high. During the same time period, the Nasdaq Biotechnology Index is up 5%.

Hemispherx bulls (a dwindling lot) continue to believe FDA will approve Ampligen for chronic fatigue syndrome soon after receiving the outstanding information in December. But the more likely outcome awaiting Hemispherx and Ampligen is a complete response letter from the FDA with a requirement that the company conduct new clinical trials prior to any approval.

This is what happened Monday to the drug maker

GTx

(GTXI)

and its bone drug acapodene. It should be noted that FDA

rejected acapodene's approval

despite a statistically significant pivotal clinical trial conducted under a Special Protocol Assessment with the FDA. The active ingredient in acapodene is also already approved, albeit at a different dose and for a different indication. Still, FDA refused to approve acapodene, asking GTx to conduct two new clinical studies.

The GTx setback doesn't bode well for Hemispherx, especially since Ampligen belongs to an entirely new and unproven class of drug and results from the single phase III study in chronic fatigue syndrome either barely achieved statistical significance or

outright failed

, depending on which version of the data you look at.

-- Reported by Adam Feuerstein in Boston

Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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