Pharmaxis stock plummets on negative FDA recommendation

Pharmaxis (ASX:PXS) stock has dropped 40% following a negative recommendation from an expert panel that Bronchitol should be approved by the FDA.

Pharmaxis (ASX:PXS) has suffered another setback following a negative recommendation by an expert committee advising the FDA on the potential approval of Bronchitol for treating cystic fibrosis.

The Sydney-based company’s stock was trading at $1.25 at the time it entered a trading halt prior to the announcement of the panel’s recommendation.

Following the news, the stock plummeted to 64c in heavy trading, slowly climbing its way back to 75c, down 40%, as of around 11.25 am Thursday.

The Pulmonary-Allergy Drugs Advisory Committee (PADAC) voted on three questions concerning the safety and efficacy of Bronchitol in treating cystic fibrosis patients aged 6 or over.

It came to a negative conclusion on all three questions, which are as follows:

1. “Considering the totality of the data, is there substantial evidence of efficacy for DPM (Bronchitol) at a dose of 400 mg twice daily for improvement of pulmonary function in patients 6 years and older with cystic fibrosis?”
2. “Is the safety profile of DPM (Bronchitol) for the maintenance treatment of patients with cystic fibrosis sufficient to support approval?”
3. “Does the efficacy and safety data provide substantial evidence to support approval of DPM (Bronchitol) at a dose of 400 mg twice daily for the management for cystic fibrosis in patients aged 6 years and older to improve pulmonary function?”

PADAC reviews and evaluates available date concerning new products and makes recommendations to the FDA as to their effectiveness and safety. The committee includes 14 voting members made up of experts.

The committee deliberated on Bronchitol for over 7 hours in Washington in the US and delivered its conclusions early this morning Australian time.

“The committee vote is disappointing; however, we are aware that these recommendations are not binding on the FDA and we will continue the process of working with the FDA to bring Bronchitol to patients in the US,” said Pharmaxis CEO Dr Alan Robertson.

“It is important to remember that we are in a process and that opportunities remain to discuss the issues that were raised by the committee before the FDA makes its final decision on 18 March 2013.”

However, the negative recommendation makes it less likely that the FDA will approval Bronchitol at this dosage for patients 6 years or older, raising the possibility of Pharmaxis conducting new trials to generate new data.

Bronchitol has been approved in Europe and has a PBS listing in Australia.

The news comes as Pharmaxis also announced a financing agreement with NovaQuest Pharma Opportunities Fund worth up to US$40 million to support the development, manufacturing and commercialisaion of Bronchitol in the EU and US.

An initial US$20m will enter Pharmaxis’s coffers within 30 days, with an additional US$20m invested conditional on Pharmaxis meeting certain commercial and regulatory milestones.

NovoQuest will receive payments from the low single- to low double-digit percentage range on sales of Bronchitol for a period of 8 years in the EU and 7 years from the launch of Bronchitol in the US.

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