For Hemispherx Biopharma Inc. (HEB), it has been a long hard ride down -- with its stock now having fallen to a low of $0.36 from its 52-week high of $1.20. Having been a lightning rod for controversy about its investigational chronic fatigue syndrome drug Ampligen, the company has been in the limelight more often for the wrong reasons in the past.
Chronic fatigue syndrome, or CFS, is a condition in which patients have persistent or relapsing fatigue. There is neither a known cause, nor an effective treatment for CFS.
Ampligen, which has been pacing the sidelines for nearly four decades, was expected by investors and patients to be approved by the FDA at least this month. But the FDA, which was expected to decide whether or not to approve Ampligen for chronic fatigue syndrome on February 25, has now extended the review period by another three months. Will the long wait prove fruitful for Hemispherx?
Company Overview
Hemispherx Biopharma, as it is now known, was founded in 1966 under the name HEM Research, Inc. The company changed its name to HEM Pharmaceuticals Corp. in 1991 and to Hemispherx BioPharma Inc. in June 1995. The company went public in November 1995 raising $16 million in its initial public offering. A dig into Hemispherx's history uncovers the many twists and turns of Ampligen - the drug waiting for FDA approval. Ampligen has received Orphan Drug designation from the FDA for four indications -- AIDS, renal cell carcinoma, chronic fatigue syndrome and invasive malignant melanoma.
Ampligen - Tried and Tested?
Ampligen, an experimental therapeutic, was originally discovered and developed at The Johns Hopkins University in early 1970s and was thereafter licensed to Hemispherx. William Carter, the CEO of Hemispherx is the co-inventor of the drug.
Before Hemispherx finalized its new drug application for Ampligen for chronic fatigue syndrome, the company had claimed the drug as a potential treatment for various diseases including AIDS, chronic hepatitis B and certain cancers, earning it the sobriquet "a drug in search of a disease," as noted in Mindy Kitei’s 1994 Philadelphia magazine article "The AIDS Drug No One Can Have." Carter also had plans to treat tobacco with Ampligen and create a "healthy" cigarette. According to the company website, Ampligen is undergoing phase 2b trial for HIV in the U.S., phase III trial for HIV in China and is in preclinical testing for avian flu in the US, Japan and Canada.
The history of Ampligen will be almost incomplete if it lacks mention of New York securities trader named Manuel Asensio. In 1998, Asensio, a high-profile sort-seller published negative reports about Ampligen on his Web site, claiming that the investigational drug "has no medical or economic value".
In 1998, Hemispherx sued Asensio alleging that his negative publicity was aimed at driving down the company's stock price. The company alleged that the profits that Asensio & Company and its co-conspirators stood to make through their scheme was greater than $25 million based on their publicly stated target of driving the Hemispherx share price from its peak of about $13 per share to below $1. The lawsuit sought to recover the $320 million in value lost by Hemispherx shareholders as a result of Asensio & Company's activities, plus punitive damages. The following year, Asensio filed a countersuit against Hemeispherx, alleging defamation.
Rocky Past
Chemical giant Du Pont Co., which had long wanted to make it big in the pharmaceutical industry, became interested in Ampligen after a medical journal The Lancet published encouraging results of ten HIV-positive patients treated with Ampligen.
In October 1987, Du Pont entered into a partnership with Hemispherx, which was then operating under the name HEM Research, to develop Ampligen in the treatment of AIDS. Expecting Ampligen to be a high flier, Du Pont acquired 6% of HEM's stock for $10 million and agreed to fund part of a 300-person clinical trial, according to reports.
After Ampligen flunked the clinical trial of its effectiveness in treating AIDS, Du Pont terminated its partnership with HEM in October 1988. It was around the same time that year HEM fired its CEO Carter for mismanagement of the AIDS clinical trials and switched its attention to chronic fatigue syndrome.
As outlined in Kitei's article, Carter, a driving force at Hemispherx, was also accused of attempting to exhort $1 million from an HIV patient who wanted to get enrolled in a pilot study of Ampligen. By 1990, Carter settled the lawsuits and found his way back in the company.
The company filed an application for a 'treatment IND' for Ampligen on September 3, 1991 based on the study results involving 92 patients with CFS. A treatment IND status is intended to provide desperately ill patients with promising experimental drugs even before they are approved for marketing. Treatment IND status is given to drugs completing Phase 2 or currently in Phase 3 trials.
In October 1991, the FDA notified the company that its application to provide Ampligen under a treatment IND for patients with chronic fatigue syndrome was placed on hold as the data did not support the expansion of Ampligen treatment.
In its letter, the regulatory agency stated that the company's study results involving 92 patients were preliminary and that data submitted to the FDA were incomplete and inadequate to assess safety and effectiveness of the drug in CFS. The FDA had also raised serious concerns serious about the potentially life-threatening reactions including acute liver toxicity, severe abdominal pain and irregular heartbeat that were observed during the study.
The following year -- in October 1992, HEM was authorized by the FDA to begin a Phase II/III study of Ampligen for the treatment of chronic fatigue syndrome.
In the first-quarter of 1998, the FDA approved the CFS cost recovery treatment program in the United States, allowing the company to recover the cost of Ampligen from a limited number of patients that qualify for the treatment.
Hoping For A Solid Future
In August 2004, Hemispherx completed a randomized placebo controlled phase III trial dubbed AMP 516, which evaluated Ampligen for the treatment of CFS. Over 230 patients who were enrolled in the phase III trial were randomized to receive either Ampligen 400 mg twice weekly or placebo. According to the study results, in the treatment arm, there was a statistically significant increase in patients' physical performance as measured by Treadmill Exercise Tolerance Testing, compared to placebo.
After missing the deadline for filing the new drug application in 2005 and 2006, finally in October 2007, the company filed the NDA for Ampligen as a treatment for chronic fatigue syndrome, which included data from four well-controlled trials with over 1,200 trial subjects and 90,000 doses. In December of 2007, the FDA notified the company that its new drug application was "not sufficiently complete" to permit substantive review.
Convinced by the company's reply filed in January 2008, the regulatory agency accepted for review the new drug application for Ampligen to treat CFS in July last year. However, the long wait for Hemispherx looks set to continue because the FDA, which was expected to issue a response on the pending new drug application for Ampligen on February 25, has now extended the action date by another 3 months.
According to the company, the global market for an effective CFS drug is worth over $1 billion. The CFIDS Association of America estimates that four million Americans suffer from chronic fatigue syndrome.
Financial Metrics
Hemispherx has incurred substantial operating losses since 1987. The company's accumulated deficit as of September 30, 2008 was about $194.5 million.
Net loss for the third quarter ended September 30, 2008 narrowed to $3.42 million or $0.05 per share from $5.72 million or $0.08 per share in the year-ago period due to a reduction in R&D expenses and general & administrative costs.
The only commercial product of Hemispherx is Alferon Injection approved for the treatment of refractory genital warts and is sold in the U.S., Mexico, Germany, Singapore, and Hong Kong. The company derives its revenue from Ampligen cost recovery program and commercial sales of Alferon Injection.
Revenues for the three months ended September 30, 2008 plunged to $17,000 from $285,000 for the same period in 2007. Revenue for the third quarter of 2008 was derived only from Ampligen cost recovery program. There were no revenues related to the sale of Alferon Injection for the quarter ended September 30, 2008, compared to $251,000 in 2007. Commercial sales of Alferon Injection were halted in April 2008 as the current expiration date of the company's finished goods inventory expired last March.
Work on the Alferon Injection is expected to resume in mid-2009 and that means there may not be any Alferon Injection product commercially available until 2010, according to Hemispherx.
Closing Thoughts
Hemispherx will be presenting new data on Ampligen at the upcoming International Association of Chronic Fatigue Syndrome in Reno, Nevada on March 13. The company has persevered through trying times with the hope of getting Ampligen approved by the FDA as a legitimate treatment for chronic fatigue syndrome. Will the decades-long effort of the company bear fruit at least this time? Stay tuned....
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