MELA, AMAG, ANDS, MTXX In Own Battles
So many small-cap biotech companies struggling to get their first products to market are turned away by the almighty Food and Drug Administration (FDA).
It reminds me of the all-knowing Wizard of Oz as he listened intently to what people were asking for or offering, then roared them away or blessed them with good intents.
As you know an approval or delay or downright dismissal by the FDA’s infinite wisdom can make or break small-cap biotech companies.
Here are few recent examples, and how shareholders and the public reacted:
Shares of Matrixx Initiatives Inc. (NASDAQ: MTXX) fell this week after the company disclosed several class action lawsuits related to its withdrawn cold treatment Zicam. Last week after the markets closed ahead of the long holiday weekend, the Scottsdale, Ariz.-based company said it is aware of six class action lawsuits connected to Zicam. The company also has disclosed a personal injury lawsuit involving 117 plaintiffs.
The FDA advised consumers to stop using Zicam products in mid-June, because the zinc in Zicam swabs and gel may damage the sense of smell. Matrixx started a voluntary recall on June 24.
After disclosing lawsuits involving residents of Arizona, Illinois, California, Florida, Texas, Minnesota, Wisconsin and Missouri, the stock has fallen as much as 10%.
Another company, Cardiome (NASDAQ: CRME), is facing yet another regulatory delay as the FDA administration wants a closer look at safety risks of its irregular heart rhythm drug.
Investors, who've long awaited approval for atrial fibrillation (NYSE:AF) treatment vernakalant, pushed Cardiome's shares down $2.17, or 18.2%, to $9.78 after the FDA issued an "approvable" letter with data requests.
In order to approve the drug -- which is being co-developed with Japanese drugmaker Astellas and goes by the brand name Kynapid -- the FDA is asking for safety information from all ongoing and completed studies on the treatment, regardless of what they are testing it for, the form of the drug, and what dose it is.
The FDA is concerned with serious adverse events in eight patients with compromised ventricular function. Regulators are asking Cardiome and Astellas for evidence in support of the drug's risk benefit profile in this population. Without such evidence, the FDA could decide to restrict the use in that subset on the drug's label.
Another company facing problems is Anadys Pharmaceuticals (NASDAQ: ANDS). It is struggling with the funding of the midstage early-stage hepatitis C drug program for ANA598,
Now, the earliest approval date possible is nine months because it must raise $16 million from investors in order to pay for the next clinical study of its hepatitis C drug ANA598.
The news is disappointing because investors had hoped Anadys would push ahead with ANA598's development with a deep-pocketed drug company partner.
A partnership for ANA598 would have brought much-needed money into the company in a non-dilutive fashion.
Anadys released phase I data on ANA598 in April, demonstrating the drug's antiviral activity at three different doses, but patient dropouts due to rash raised concerns about the drug's safety and sent Anadys shares tumbling. The stock has fallen nearly 30% since June 1.
Here are two more stocks with the FDA on their sides.
One is a medical technology company that doesn't really have revenues, much less earnings, and it doesn't have a product approved for sale. What it has is a great idea for a hand-held device that will enable dermatologists to scan skin lesions to determine whether they are melanomas.
The company is Electro-Optical Sciences (NASDAQ: MELA) and the device-called the MelaFind-uses light at various wave-lengths to scan the suspicious lesion. It then uses its database of melanoma images to calculate a diagnosis.
With a huge age cohort of sun-worshipping Baby Boomers now approaching the danger years, the diagnosis of melanoma, the leading cause of death from skin cancer, is a big deal. The MelaFind is non-invasive, quick, and reportedly has a 95% accuracy rate.
Electro-Optical has submitted a Pre-Market Approval form to the FDA for MelaFind. The FDA has put the decision on a fast track, and the estimated decision date is some time this December.
This is a low-priced, speculative stock, but the potential payoff is huge.
Another company on the go is Amag Pharmaceuticals (NASDAQ: AMAG), which has recently won FDA approval for its drug to treat chronic kidney disease, called Feraheme. The Lexington, Mass.-based company’s drug is applied via an injection and is designed to be used as an iron replacement therapy to fight anemia in patients with kidney disease. The drug can be used by patients who are on or off dialysis.
The drug is expected to be available commercially later this month, and will be distributed primarily through wholesalers and specialty distributors.
Amag’s stock ticked up almost 4% percent in midday trading last week Wednesday, to $56.69 a share.
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