Hemispherx Biopharma (NYSEAMERICAN: HEB) has had a rough go in the market as of late. Fueled by erroneous algorithmic reporting surrounding an SEC filing, the stock has given up more than 30%. The company promptly demanded corrections of the errors — and corrections were duly published, for example stating “…the correct aggregate offering price of up to $4.5M, not $70M. We apologize for the error.”
Now, I’m not saying this to scare you. If you’ve read my articles on Hemispherx (HEB), you know that I believe that the stock represents an opportunity. I’m outlining these recent AI errors that were corrected so that you understand the sheer scale of the opportunity should coming events go in the company’s favor. Here’s what’s going on:
HEB Stock Falls Victim to Erroneous Algorithmic Reporting
When we think of artificial intelligence, we think of a computer that is smart enough to have a conversation and understand what it’s talking about. I thought that too, until I commissioned an AI article writing project.
Artificial intelligence doesn’t EVER understand exactly what it is seeing, reading or writing. It’s more of an algorithm based on averages. An AI may know that when writing about a stock like Hemispherx Biopharma, it uses certain words and that specific data should follow terms like volume or price, but it doesn’t understand the meaning of those words.
As such, when artificial intelligences write about publicly traded companies, the companies and those that make moves based on this content can become victims to a machine that really didn’t understand what it’s saying. I know, it sounds crazy, but the reality is that computers aren’t quite as smart as people give them credit for, at least not yet.
Unfortunately, HEB stock was recently the victim of one of these AI-based mistakes. A number of signal services, such as StreetAccount and PlacementTracker, saw an SEC filing and made an error of reporting that the company was raising $70 million in an ATM through an equity distribution program. While the AIs that wrote the messages saw that statistically, $70 million was the number being raised, it was actually up to $4.5 million at this time, and the truth is that the $4.5 million might never be used. According to the company, the company had in place an available ATM program since 2012, which had not been active for six months and the prospectus supplement filed in relation to the new program only relates to the sale of up to $4.5 million of stock. If the company ever desires to raise additional funds under the program, it would need to file a new prospectus supplement.
You see, the artificial intelligence didn’t know that it was important to explain that in substance, this is an updated existing credit facility, not a new one. The AI also didn’t mention that the company hasn’t touched the revolving credit facility in the last six months, nor that the facility provides the company with access to funding at the incredibly low interest of 3.5% without warrants, ensuring that if HEB ever did need funding, it could access it at a cost that’s unmatched in most fund raises.
The bottom line here is that the artificial intelligence programs that authored the alerts leading to drastic declines didn’t know what they were doing and their actions harmed the company’s stock price.
Talking About The Future
I’ve talked about this multiple times in the past, Hemispherx Biopharma’s Ampligen product is likely to lead to several catalysts ahead. The company is currently in the process of moving through multiple clinical development programs surrounding the treatment of various forms of cancer through the use of Ampligen. In fact, there are already two active clinical trials treating patients with the combination therapy of Ampligen and pembrolizumab (also known as Merck’s Keytruda), one in ovarian cancer and the other in metastatic triple negative breast cancer.
Overall, there are five active clinical trials assessing Ampligen as an option for recurrent ovarian cancer, colorectal cancer metastatic to the liver, metastatic triple negative breast cancer, and prostate cancer, all of which can prove to lead to positive catalystic events.
The Bottom Line
The bottom line here is that Hemispherx and its investors fell victim to a mistake made by artificial intelligence. Unfortunately, even the highest end of technologies is not perfect, and as technology continues to shape how we live, it will make mistakes. Nonetheless, with so many catalystic events ahead, Hemispherx Biopharma is a stock that’s well worth paying attention to.
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Disclosure – CNA Finance, parent company to Alpha Stock News, has a monetary relationship with Hemispherx Biopharma. Click here to learn more.