The clock is quickly ticking down towards Hemispherx Biopharma's (NYSEMKT:HEB) Food and Drug Administration (FDA) December 20th meeting with the Arthritis Advisory Committee (NASDAQ:AAC) to discuss Ampligen's New Drug Application (NDA) for Chronic Fatigue Syndrome (CFS). As previously announced, the Prescription Drug User Fee Act (PDUFA) review goal for Ampligen is February 2nd, 2013.
The bulls and bears are thus having a vociferous argument over whether or not Ampligen will finally be approved this time around. With about a million people affected by CFS in the U.S. alone, an FDA approval of Ampligen could thus result in one of the more impressive share price appreciations in recent history. Specifically, HEB's current market cap of $116M is several-fold under what a complete drug monopoly on a major disorder like CFS is thought to be worth. While placing a hard number on the market size for CFS has proven difficult, analysts have suggested it's likely to be in the multi-billion dollar range.
Given the substantial interest in Ampligen from investors and potential CFS patients alike, I think it would be helpful to give the view of a professional scientist on the drug's current prospects for approval. Most of the arguments put forth thus far have come from either investors that lack a scientific background, or professional writers that lack a statistical background. As such, I believe there is a general misunderstanding about how the FDA currently views Ampligen as a potential treatment for CFS, versus how it has viewed it in the past.
I am a professionally trained scientist with a formal background in multivariate statistics, clinical trials, and have worked closely with the FDA in the past. So I feel my view on Ampligen is unique in this regard, and should help to clarify some of the outstanding issues. Before launching into my view of Ampligen's prospects, however, I believe it is important to give brief introductions to the drug's biochemical mechanism, some insightful comments from patients, and its recent history with the FDA.
Ampligen: Biochemical Mechanism as a Potential CFS Therapy
The exact cause(s) of CFS remain a mystery at this time. In fact, several hypotheses have been posited, and many are not necessarily mutually exclusive. The complex nature of CFS pathophysiology is one of the main reasons why there has been no FDA-approved therapy to date. Even so, viral infections are a leading candidate as a primary causative agent due to the fact that over 80% of reported cases start out with flu-like symptoms, and patients often show impaired immune systems. This is where Ampligen comes into the picture.
Ampligen is a synthetic, double-stranded RNA molecule with regularly unpaired regions. Its primary therapeutic function is to stimulate the innate immune system by binding to a Toll-like receptor (TLR-3), which is a non-catalytic cell surface receptor that recognizes microbial molecules that pass through intestinal mucosa. Biochemically, Ampligen works by inhibiting double-stranded RNA viruses by regulating two immunomodulatory important enzymatic pathways:
1) 2,5-oligoadenylat synthetase/RNase L (2,5-A synthetase/RNase L) pathway.
2) The P68 protein kinase pathway.
Specifically, Ampligen acts to activate both the 2-5A and P68 enzymatic pathways simultaneously, whereby producing proteins that inhibit viral replications called "interferons" (IFNs). Interferons, in turn, stimulate the production of cytokines and lymphokines, which are chemical messengers immune cells used to communicate the memory response of antigen specific CD8+ cells (i.e., a type of white blood cell thought to play a major role in cell-mediated immunity). Simply put, Ampligen has antiviral and immunomodulatory effects through its ability to upregulate the production of interferons. In theory, Ampligen should thus benefit CFS patients where viral infections are the underlying cause.
Commentary from CFS Patients Treated with Ampligen
1) "Call me Lazarus. Call me the Come-Back-Kid. Whatever you call me, the only reason I am here and functioning pretty well today is Ampligen. I have absolutely no doubts about its efficacy in the treatment of my illness. It has brought me back to life. It is the real thing. What I would like to do now is quickly chart the course of my improvement on Ampligen over the past year. From start to present, my response to Ampligen has been nothing short of amazing: the extraordinary efficacy of the treatment, at least in my case, cannot be seriously questioned. Indeed, I would reject out of hand any suggestion that my recovery has some other cause or is merely coincidental."
2) "Despite all those physical side effects, and the concomitant emotional side effects, today as the battle draws to a close I have to say yes, it was worth it! Ampligen delivered as advertised! Although I don't have all the tests results from the clinic, by family's and co-worker's measurements, along with my own personal report-card, I am probably 70% better! We have a saying at the clinic- 'Ampligen doesn't cure you or fix everything, but it gets you close."
There are mounds of patient testimonials littering the internet about Ampligen, but they tend to have a similar theme overall. In sum, patients generally reported that Ampligen does indeed have side effects, but it also benefits many patients suffering from CFS.
Recent History of Ampligen at the FDA
Hemispherx has been attempting to get Ampligen approved by the FDA for over 30 years now, and the story is mind-boggling to say the least. Instead of focusing on previous events that no longer have a material impact on the company or the drug, however, I will solely rehash the recent events that may affect the FDA's upcoming decision on Ampligen.
On October 11th, 2007, Hemispherx filed a NDA for Ampligen for the treatment of CFS with the FDA. The FDA responded in kind on December 5th, 2007 with a list of fourteen questions, deeming the NDA "not sufficiently complete" to permit a formal review of the application. Hemispherx responded to the broad range of clinical and pre-clinical questions on January 9th, 2008, and was subsequently granted a formal review later in the year. In December of 2009, the FDA issued a Complete Response Letter (CRL) to Hemispherx informing the company that it could not approve Ampligen until all of the following issues have been addressed via a new round of clinical trials:
· Show credible evidence of Ampligen's efficacy using expanded studies that are at least six months long
· Show that Ampligen is safe; that it does not cause autoimmune disorders or heart problems
· Produce studies in which patients are on more than one dose regimen
· Produce studies in which at least 300 patients are on doses intended for the market
· Follow the FDA's 'recommendation' that rodent studies be done to examine carcinogenicity
· Provide additional data on quality control issues
· Fix Inspection issues at one of Ampligen's facilities
As aptly pointed out by Adam Feuerstein, the 300-person study requirement was a crippling financial blow to the company, and one it simply could not meet. As such, the approval process for Ampligen laid dormant for 3 long years until the FDA suddenly reversed course in July, 2012, thereby nixing the 300-person study requirement, and deeming Ampligen "safe" based on a June 8th , 2012 meeting with Hemispherx. Ampligen was subsequently granted a new NDA review to commence on December 20th, 2012, and a PDUFA review goal of February 2nd, 2013. Now that the FDA has deemed Ampligen "safe," Ampligen is halfway home in the approval process. The upcoming review will thus focus primarily on Ampligen's "efficacy." So that's where we are in this convoluted, meandering process.
Is Ampligen an effective treatment for Chronic Fatigue Syndrome?
In a scathing review of Hemispherx's reanalysis of its Phase III Ampligen dataset, Adam Feuerstein argued that the FDA is not going to approve Ampligen's recent NDA application. He comes to this conclusion based on some selective statistics in a recent paper published by Hemispherx, and a belief that reanalyzing old data isn't scientifically valid. He states repeatedly in the article that the company should have complied with the FDA's initial demand for a new round of costly clinical trials. Since Adam is one of the foremost critics of both Ampligen and HEB, it's important to address his points in a public forum. So I'll start with the issue of "stale data" first.
Re-analyzing data: The truth is that Adam is indeed correct in that changing the stated statistical analysis after a manipulative experiment has been performed is, well, incorrect. Experimental design and statistical analysis go hand in hand so to speak. Before a clinical trial is ever performed, there is supposed to be a well understood statistical framework to manage issues such as "power," Type I and Type II errors, etc. But that is in the magical, make-believe world of textbook biostatistics. In the real world, experimenters change their statistical approach to data all the time. Why? Because unexpected and unforeseen events are commonplace during the course of a lengthy experiment, and it would be a complete waste of time, money, and effort to re-perform a trial based on unforeseen events. Instead, experimenters rely on "statistical controls" to deal with latent variables, and this is what Hemispherx did in its new analysis (more on this below). Finally, the idea that clinical trial data somehow has a "shelf life" and it will go bad by a certain date is a red herring. There are datasets well-over a 100 years old that scientists are still re-analyzing to this day. So I can't follow his logic on this one in the least.
Statistical efficacy concerns: In regards to Adam's statement that the results on efficacy have "gotten worse" over time, I believe the exact opposite is true. Moreover, his statement is based on a rather selective and flawed reading of the Plos One Article. In fact, when using statistical controls for patients that did not closely follow the dosing regimen, the statistical significance of Ampligen on placebo-adjusted exercise tolerance rose to a whopping 28% (p = 0.022). To my mind, this is the "real world" medical benefit of Ampligen, and its statistical methodology employed to draw this conclusion is standard. One final note: the reanalysis that Hemispherx is going to rely heavily on for its NDA application was published in an upper-tier Biological Journal, and reviewed by experts in the field prior to publication. If the expert reviewers felt the efficacy data passed muster and deserved publication, I see no reason why the FDA shouldn't feel the same. A conclusion that Ampligen is not efficacious by the FDA would be tantamount to saying the article was in fact erroneous, and should be retracted. I have a hard time believing that will happen.
Reading of the Ampligen Tea Leaves
The FDA is under pressure to approve drugs for unmet medical needs, and chronic fatigue syndrome certainly meets that criteria. Ampligen has been profoundly mismanaged by Hemispherx over the course of 30 years, leading to the mess we have today. That mismanagement, however, should not be held against the drug itself, because it has the potential to help so many victims of CFS. So for the patients and investors alike that desperately want to see the FDA approve Ampligen, I have some good news. Having worked closely with the FDA and similar governmental agencies during my career, I can assure you of one thing: the FDA did not do an about-face if it didn't seriously intend to consider approving the application. Why it did so is still a mystery, but this event did happen. Even though the re-analysis of old clinical trial data is certainly not optimal, I see no mathematical or logical reason to disregard the analysis wholesale. The patient testimonials, combined with the new analysis, tell my lying eyes that Ampligen is indeed a "safe and effective" treatment for CFS. In conclusion, I believe the FDA will agree with this view for the most part, and finally approve Ampligen as a treatment for CFS. For investors, I believe this will mean that the share price of HEB will rise several fold in short order. How high is anyone's guess, but it's going to be a "memorable investment" in my opinion.
Good luck to all those personally or financially invested in an FDA approval of Ampligen. It's been a long time coming.
Disclosure: I am long HEB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: This article was co-authored by a biotech intern (YM) at Enhydris Private Equity, Inc.