Shares of Savient Pharmaceuticals Inc (SVNT.O: Quote, Profile, Research, Stock Buzz) fell as much as 36 percent on Monday, a day after U.S. regulators declined to approve its experimental gout drug Krystexxa.
Savient shares touched a low of $10.00, making them one of the top percentage losers on Nasdaq, before recouping some loses to trade down $3.74 at $11.85 in Monday afternoon trade.
"Our confidence in Krystexxa ultimate approval remains high as the complete response letter included draft labeling and no requirement for additional clinical trials," Cowen & Co analyst Eric Schmidt wrote in a note to clients.
Leerink & Swann analyst Joseph Schwartz said companies interested in acquiring Savient -- which is viewed by analysts as an attractive acquisition candidate -- may not wait until Krystexxa is approved as the stock is cheaper now.
Savient said on Sunday the U.S. Food and Drug Administration issued a "complete response letter", saying the agency cannot approve the drug at this time.
The FDA cited "deficiencies with the chemistry, manufacturing and controls (CMC)" section of the company's marketing application, Savient said.
"There are five areas addressed within the complete response letter: CMC, BTG-Israel facility inspection observation remediation, proposed labelling, proposed risk evaluation and mitigation strategy or REMS submission and follow-on safety update," the company said in a conference call on Monday.
Cowen's Schmidt said the FDA noted that the manufacturing process was different from the process used to generate drug for the late-stage trials and Savient will now revert to and revalidate the original manufacturing process in order to address this issue.
"In terms of the REMS program, Krystexxa will require a medication guide to ensure safe use, and a communication guide for prescribers to warn of severe infusion reactions," the analyst said.
The company said it plans to resubmit its application to the FDA by early 2010.
"We are encouraged by the benign nature of the complete response, and believe that these issues can be resolved on or potentially ahead of management's guidance for biological licence application resubmission in early 2010," Leerink's Schwartz said.
Schwartz, who has an "outperform" rating on Savient shares, expects the resubmission to receive a Class I response, which typically means the regulators would review the drug within 60 days. (Additional reporting by Toni Clarke in Boston; Editing by Maju Samuel, Anne Pallivathuckal)
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