Shares of Chapel Hill drug developer Cempra plummeted 57 percent Thursday after the company reported that the Food and Drug Administration declined to approve its experimental antibiotic.
Federal regulators did not outright reject the oral and intravenous formulas of the experimental antibiotic solithromycin, or Solithera, which is aimed at treating pneumonia.
Rather, the agency issued a Complete Response Letter in which it called for an additional clinical trial that Cempra must conduct to determine the drug’s safety. Such a study could be costly and time-consuming.
The FDA also informed the company that, although it reserves comment on drug labeling pending further tests, the risk of liver damage to patients is such that it expects to require labeling on the drug that would restrict its use to patients with “limited therapeutic options” who take the drug for a limited amount of time. Such restrictions would curb the drug’s revenue potential.
Cempra has more than $225 million in cash, which the company said affords it the “flexibility to determine the best course forward.”
“We are committed ... to working with the FDA to achieve approval of solithromycin as quickly as possible,” acting CEO David Zaccardelli told analysts during a conference call.
Based on the information the FDA supplied in its letter, Zaccardelli said, the company doesn’t foresee obtaining approval of the drug before 2018.
Zaccardelli also stressed that the FDA did not request any additional tests regarding the drug’s efficacy. Zaccardelli was named acting CEO earlier this month after co-founder Prabhavathi Fernandes retired as president and CEO.
Although a clinical study focused solely on safety can be conducted much faster than one that is also designed to assess efficacy, “the exact timetable and cost of any future clinical study will depend on its feasibility, scope, duration and complexity,” Zaccardelli said.
The FDA told the company that the safety database of 920 patients who received solithromycin was too small to adequately characterize the nature and frequency of the drug’s adverse side effects on the liver. The agency has recommended Cempra conduct a new study of 9,000 patients who are treated with solithromycin.
One analyst asked Zaccardelli if he could “foresee a scenario where it makes sense to do such an arduous study” given the restrictive labeling that the FDA insists would be required.
“Those answers won’t be determined until we meet with the FDA and understand the study in its totality,” Zaccardelli said.
The FDA also cited unspecified “deficiencies” at the contract manufacturing plants in India and Kansas that Cempra lined up to produce solithromycin. Cempra is in the process of shifting some of its production to a contract manufacturing plant in Mexico.
Several Wall Street analysts have been anticipating that the FDA would issue a Complete Response Letter after agency staffers concluded last month that the antibiotic posed a potential risk of liver damage – news that triggered a 61 percent drop in Cempra’s shares. An FDA advisory board subsequently concluded, by a 7-6 vote, that the drug’s efficacy outweighed the risks.
Cempra shares closed Thursday at $2.60, down $3.50. Including Thursday’s plunge, its shares have fallen 92 percent this year.