Forest Laboratories Inc. and Louisville-based Replidyne Inc. said today that U.S. regulators won’t approve their experimental Faropenem Medoxomil antibiotic, designed for widespread use.
Shares for both companies plunged.
Replidyne’s shares fell as much as 53 percent, the most since June, and Forest’s stock dropped as much as 5 percent, the most in almost six months.
The antibiotic was being developed to treat bacterial sinusitis, community-acquired pneumonia, chronic bronchitis complications and skin infections, the companies said in a statement today.
The U.S. Food and Drug Administration said it needed more clinical studies for all indications, the statements said.
Forest, based in New York, wants to develop new drugs to reduce reliance on two drugs that accounted for 80 percent of its $2.96 billion in revenue last year, said Timothy Chiang, an analyst at FTN Midwest Securities Corp. in New York.
“The company could be dealing with a cliff – falling off a cliff – in terms of its revenue base” by 2011 or 2012, Chiang said in an Oct. 17 telephone interview. “They’re working hard to put together a late-stage pipeline.”
The Faropenem sales alone won’t be enough to support Forest once its top products face generic competition in 2011, Chiang said. He estimated the antibiotic could produce $25 million in sales by 2008, if approved.
A letter from the FDA turning down the application didn’t include safety concerns, the statement said. The two companies said they would discuss clinical plans with the FDA, including the number of trials needed for each indication. They expect that a minimum of two years will be required for completion of the clinical studies, according to the statements.
Shares Fall Shares of Forest fell $2.15 to $49.32 this morning in New York Stock Exchange composite trading, after touching $48.80 earlier. Replidyne’s shares declined $5.04 to $4.99 in Nasdaq Stock Market trading, after dropping to $4.80 earlier.
Replidyne “is in a strong financial position to continue the development of faropenem with our partner Forest and to advance our promising pipeline,” said Replidyne’s Chief Executive Officer Kenneth Collins in a statement today.
Forest and Replidyne announced their agreement to jointly develop the antibiotic in February, and will discuss the collaboration further based on the agency decision, the statements said. The companies had already said they planned to conduct additional studies on Faropenem for other types of adult infections and on a formula of the drug for children.
New studies will be designed to prove the superiority of the drug against a placebo, the statement said.
