Investors in drug maker Cempra Inc (NASDAQ:CEMP) have had to contend with a string of bad news that has lopped nearly 70% of the stock’s value in just four sessions.
On Wednesday, Cempra fell 60.86% to close at $7.30 on volume of 20.79 million. Before that, on October 28, the stock plunged 21%.
The swift falls have taken Cempra past its 200-day moving average, as well as long-term support lines at $14.60 and $8.40, and into a bearish downtrend.
Cempra Inc (NASDAQ:CEMP)’s manufacturing arrangements unravel
The first piece of bad news was the company’s admission on a conference call that its contract manufacturing arrangement with Wockhardt in India may not be acceptable to the FDA.
“Based on our discussion with the agency last week related to this question, we currently believe the FDA may not allow us to use the API produced by Wockhardt for the approval of commercial supply of solithromycin. We remain in a dynamic, real-time discussion with the FDA on this topic and we will provide you with an update when this issue has been clarified,” said Prabhavathi Fernandes, President and CEO.
Though the company is having a back-up manufacturing arrangement, the failure of the Wockhardt arrangement is a setback to the commercialization of solithromycin, its lead drug and a pneumonia antibiotic.
Solithromycin is being reviewed by the FDA and an advisory committee meeting is to be held tomorrow, November 4.
FDA raises a red flag on Cempra Inc (NASDAQ:CEMP)’s solithromycin
Hardly had the dust settled on the commercial manufacturing issue, when the FDA released another bombshell in the way of briefing documents for the advisory committee that raised doubts about solithromycin’s safety, particularly regarding liver damage as evidenced by rising liver enzyme levels.
The one-two punch from the FDA completely neutralized the November 1 announcement by Cempra regarding the receipt of a $10 million milestone payment from Toyama Chemical Co., Ltd., a subsidiary of FUJIFILM Holdings Corporation, triggered by Toyama progressing to Phase 3 studies with solithromycin in Japan, the world’s second largest antibiotic market.
Eyes now rest on the advisory committee meeting tomorrow and the PDUFA dates of December 27 and December 28.