Knobias ClipReport (9-4-2007)

Submitted from Knobias ClipReport

Cash rich biopharmaceuticals seem to be on the trading radar of many in the small arena again. These lowered risk, waiting game type companies have cash equal to market cap, drugs in the pipeline, and possibilities, albeit sometimes small, to develop revenue producing drugs.

Northfield Laboratories Inc. (NFLD) is a biopharmaceutical developing an oxygen-carrying red blood cell substitute for the treatment of life-threatening blood loss, when an oxygen-carrying fluid is required and red blood cells are not available.

The Company’s PolyHeme product is a human hemoglobin-based temporary oxygen-carrying red blood cell substitute. PolyHeme simultaneously restores lost blood volume and hemoglobin levels and is designed for rapid, massive infusion. PolyHeme requires no cross-matching and is compatible with all blood types and therefore is immediately available for infusion. It also has an extended shelf life in excess of 12 months.

Dating back to December of 2006, the Company’s product had been in a race for a first to market blood substitute with BioPure Corporation (BPUR). Their controversial clinical trial was rebuffed by FDA advisers leaving NFLD in a competitor-less market. But even without a competitor, the road to market this drug has been bumpy and could still see some long odds in the last leg.

NFLD’s reported preliminary phase III results in December, but during its review and interpretation of these results from the contract research organization (CRO), two discrepancies in the dates of death for patients in the study, in which mortality was the primary endpoint, were identified. The CRO was notified and agreed that these data points were inaccurate.

The Company noted that they would unlock the study database and make corrections to ensure accuracy of the findings. The unlocking is somewhat of a taboo evident by the stock’s reaction following the reporting of these results. Shares fell from the $17 area to $4.

In the study, badly hemorrhaging trauma patients were randomly assigned to PolyHeme, or to standard therapy, which is a saline solution in the ambulance and donor blood in the hospital. The Company said there were a total of 722 patients in the study, and that 349 patients got the blood substitute and that 363 got standard treatment. However, they noted the findings of errors in the data and would correct them before final results would be released.

In May, the Company reported the final corrected findings that showed the results were noninferior. In the vast majority of clinical trials, a company is required to show that its drug is better than something else, either a placebo or the standard therapy for an illness. In the NFLD study, PolyHeme could have either been superior, inferior or the middle ground, noninferior.

Many have noted that the FDA probably will not give clearance to a product that doesn’t reach superior status, but that’s what the Company hopes will happen especially considering the availability of blood products in remote areas, in the armed forces, and in emergency situations.

Noted as the main focus of fiscal 2008, was the successful submission of a Biologics License Application for PolyHeme(R) with a request for priority review. In the meantime, shares have eroded to near cash levels, which suggest a fairly low risk for the waiting of a response from the SEC. Investors would be wise to watch.


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