Forest Labs, Replidyne Down On FDA Rejection Of Drug

The Food and Drug Administration rejected an application for marketing approval for a new antibiotic, sending shares of the drug's developer, Replidyne Inc. (RDYN), plunging about 50% Monday, while Replidyne marketing partner Forest Laboratories Inc. (FRX) was off almost 6%.

The companies indicated it could take at least two years to complete additional studies of the drug to address FDA concerns.

Replidyne shares fell $5.19 to $5.05 on volume of 2.8 million, above the daily average of 50,455. Forest Labs shares were off $3.06 at $48.41 on volume of 2.6 million, above the daily average of 2.2 million.

Replidyne, Louisville, Colo., applied in December for FDA approval of faropenem medoxomil, which is designed to combat forms of sinusitis, pneumonia and other infections. Replidyne signed a licensing agreement in February giving New York-based Forest Labs primary responsibility for sales and marketing of the drug.

The FDA issued a non-approvable letter for faropenem medoxomil and recommended further clinical studies for all the uses for which Replidyne sought approval, the companies said in a press release Monday. In particular, FDA may require "superiority studies" for the antibiotic's use to treat acute bacterial sinusitis and acute exacerbation of chronic bronchitis. Also, the FDA may require additional microbiologic evaluation for the drug's use to treat community-acquired pneumonia, the companies said.

The FDA didn't raise any safety concerns or issues surrounding the chemistry, manufacturing or controls for the product, the companies said.

Replidyne and Forest Labs plan to discuss the clinical plans for the drug with the FDA, including the number of trials needed for each use. The companies expect a minimum of two years will be required to complete the studies.

"We are disappointed that the FDA is requiring additional clinical trials," Replidyne Chief Executive Kenneth Collins said in a press release. "However, we believe that at the doses studied faropenem has a clearly demonstrated favorable safety profile. Replidyne is in a strong financial position to continue the development of faropenem with our partner Forest and to advance our promising pipeline."

Replidyne and Forest also plan to discuss their licensing agreement based on the FDA decision, the companies said in the press release.