On Christmas Eve, the FDA played the role of Grinch for ALIM And PSDV shareholders by issuing a Complete Response Letter (CRL) for ALIM's Iluvien application. It seems that both ALIM and PSDV shares will decline at least 25% on Monday when trading resumes, as it is likely to take 9-12 months for ALIM & PSDV to reach the point where an FDA decision again is imminent, as was the case for the past month or so. While this clearly is a nasty setback, it is not a "death sentence," and it cannot even be said that it was completely unexpected. Let's dissect why this is the case.
Firstly, the issuance of a CRL is not a rejection of the application. A CRL reflects a decision by the FDA that approval is not possible at the current time. The CRL also provides the company filing the application with the opportunity to remedy the issues that the FDA notes as deficient in the letter itself. The FDA's procedures provide for the company to have a meeting in person with FDA personnel within a specified period of time during which the company will get further specific information about what it must do to gain approval.
In the current case, the FDA noted manufacturing irregularities at more than one of ALIM's contract manufacturers. The FDA will, in short order, tell ALIM and those contract manufacturing organizations what it observed that must be corrected.
Secondly, the FDA decided that 24 months of trial data was insufficient to allow it to approve Iluvien at the current time. The FDA requested that the company provide 36 months of data and additional statistical analysis of the data. The company already has the 36 month data, as the 36-month timeframe ended in December 2010. The FDA did NOT request or require any additional trials to be done, an event that would have been as close to a "rejection for cause" as seemingly possible.
ALIM will hold a conference call at 8:30 a.m. tomorrow morning to discuss its way forward from this point.
The company's FDA application and "Priority Review" were two steps forward, in my view. The CRL is "one step back."
OUCH!
ReplyDeleteALIM still down 10% and PSDV down 20%. Missed the open so the panic was likely worth sticking ones toes in with PSDV opening sub $5 and ALIM at $9.00. Could have made an easy 10% on both it looks like.