Northfield Labs Heads Permanently South

Northfield Labs (NFLD-NASDAQ) just faced what may the knockout blow for the company.  The company has been working for years now on studies for PolyHeme, its blood substitution product.  This product has been touted in the past as the Holy Grail for on the scene treatment of blood loss in trauma and injury cases, yet the hopes never matched up with the results.

The company’s stock is trading down 40% pre-market after releasing that its Phase III studies failed to meet endpoints and failed to show any statistically significance.  A prior result before this latest release even showed some progress that was interpreted as worse than the observation group.  It just looks like the fake blood product from this company is not going to come to fruition.

As of its last balance sheet reading it carried $47 million cash and equivalents and had less than $5 million in total liabilities.  Its implied market cap after this huge 40% beheading today will put it close to $66 million in market cap.  This has been a huge cash burn and before the negative results started coming out in Phase III and Phase III’s this traded higher than $17.00 over the last 52-weeks.  We noted that the implosion here back in December was the equivalent of ‘bleeding to death on fake blood.’

A small bio-medical developer named Biopure Corporation (BPUR-NASDAQ)  is trading up 8% in the Northfield Labs’ product failure.  Biopure is working on a blood oxygenation treatment supplement mainly used in anemia but could have some of the same applications.

Jon C. Ogg
May 23, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.