It was a relatively slow week for pharma stocks though a couple of companies suffered regulatory setbacks with the FDA issuing complete response letters (CRLs) for their regulatory applications.

Recap of the Week’s Most Important Stories

Cempra Plunges on CRL for Antibiotic: Clinical-stage pharma company Cempra (CEMP - Free Report) lost more than half its value with the FDA issuing a CRL for the company’s regulatory applications for one of its lead pipeline candidates, oral and intravenous solithromycin, for the treatment of community-acquired bacterial pneumonia (CABP) in adults. What is concerning is that the applications were rejected not just for manufacturing issues but also for liver toxicity issues.

The CRL said that with the risk of hepatotoxicity not being adequately characterized, Cempra should consider conducting a 9,000-patient comparative study to evaluate safety. Moreover, the agency noted that the labeling will need to include sufficient information about the potential for hepatotoxicity, which would restrict use to patients who have limited therapeutic options and limitations regarding duration of therapy. Post-marketing safety assessment including an enhanced pharmacovigilance program would also be required. All these mean a delay as well as extra costs and a restrictive label that could ultimately limit sales.

Cempra has had a rough year with shares falling 91.7% year-to-date (YTD) compared to the Zacks categorized Medical-Drugs industry YTD decline of 25.4%. Cempra’s shares lost 60.8% in early November ahead of an FDA advisory panel meeting on safety concerns mentioned in the briefing documents.

Amphastar Hit by CRL: Specialty pharma company Amphastar’s (AMPH - Free Report) shares were also hit by a CRL from the FDA for Primatene Mist (epinephrine inhalation aerosol). The agency has recommended that the company should make more changes to the label and packaging and also conduct another Human Factor validation study to evaluate the ability of consumers to use the product without the guidance of a doctor or pharmacist. The company expects to address the FDA’s concerns by mid-2017 and bring the product back to the OTC market as early as possible.

Mylan Launches Generic Concerta: Mylan (MYL - Free Report) launched quite a few generic drugs this week including its generic version of Johnson & Johnson’s Concerta (methylphenidate hydrochloride extended-release tablets, 18 mg, 27 mg, 36 mg and 54 mg for attention deficit hyperactivity disorder) and Pfizer’s Cerebyx (fosphenytoin sodium injection, for the treatment of certain types of severe seizures). According to IMS Health, Concerta sales were about $1.59 billion in the U.S. for the 12 months ended Oct 31, 2016 while Cerebyx sales were about $36.3 million during this period. Mylan also launched a generic version of Zovia for the prevention of pregnancy.

Mylan has more than 240 ANDAs pending FDA approval representing annual brand sales of about $95.6 billion, according to IMS Health. 41 of these ANDAs are potential first-to-file opportunities, worth annual brand sales of $32.5 billion for the 12 months ending Jun 30, 2016, as per IMS Health.

Shire’s Adynovate Label Expanded: Shire’s (SHPG - Free Report) hemophilia A drug, Adynovate, gained FDA approval for use in pediatric patients under 12 years of age. Adynovate’s label was also expanded to include use in surgical settings for both adult and pediatric patients. With these label expansions, the target patient population for the drug will increase. Shire had recorded hemophilia product sales of $702.4 million in the third quarter of 2016.
Performance

Large Cap Pharmaceuticals Industry 5YR % Return

Large Cap Pharmaceuticals Industry 5YR % Return

The NYSE ARCA Pharmaceutical Index gained 0.5% over the last four trading days with Merck (MRK - Free Report) declining 0.9% while AstraZeneca (AZN - Free Report) gained 0.7%. YTD, Merck has outperformed the Zacks categorized Large Cap Pharmaceuticals industry with its shares gaining 11.8% during this period compared to the industry decline of 6.1%. Over the last six months, Merck gained 3.5% while Bristol-Myers (BMY - Free Report) declined 19.3%.