Biosytems Shares Plunge in Value After FDA Action

Shares of Molecular Biosystems lost almost one quarter of their value in over-the-counter trading Friday after the federal Food and Drug Administration said it would need more information before approving the company’s first product, an ultrasound imaging agent called Albunex.

Molecular Biosystems shares finished the day at $18, down $5.875 on heavy volume of 831,000 shares traded. The fall was precipitated by a statement issued by the company on Thursday after stock trading had ended that the FDA had additional questions about its Albunex imaging agent that could delay approval of the product for several months.

The FDA notice came as a surprise to analysts because the FDA’s advisory panel had unanimously recommended approval of the agent last July, an action that is often a precursor to full FDA approval. The FDA request for additional information involves labeling, an update on safety and efficiency data and the company’s manufacturing process.

The company said it still believes that Albunex will be approved for sale sometime next year. The product would be the San Diego-based company’s first product.

Nevertheless, several investment firms downgraded their ratings of Molecular Biosystems stock on Thursday and Friday. John Kreger, a biotechnology research assistant with Vector Securities in Deerfield, Ill., said that although his firm considers Albunex’s long-term prospects for approval good, it downgraded its “buy” recommendation on the shares to neutral.

“We still very much believe Albunex is an approvable product. It has had very clean safety and efficacy data illustrated by the fact that it got a unanimous vote of approval from the FDA panel,” Kreger said. “But when you are talking about a company’s first product, its flagship product, it’s significant news and it’s not surprising that the market viewed it this way.”