Allergan Inc., a producer of eye-care products, failed to receive the backing of an expert government panel for the company's new treatment for chronic dry eye disease, sending its stock down 16% Wednesday in heavy trading.
The U.S. Food and Drug Administration advisory panel voted unanimously to recommend that the agency reject the drug, Restasis, a treatment for moderate to severe cases of dry eye disease.
The drug would have been the world's first prescription pharmaceutical for treating dry eye, which affects about 3 million Americans and is now treated with over-the-counter products.
Panel members said the company didn't prove the drug works significantly better than placebo eye drops.
"I am not completely convinced that there is a statistical or clinical difference between the treatment groups," said Donald Fong, the panel's chairman and an ophthalmologist at the Kaiser Permanente Medical Center in Baldwin Park.
Shares of Irvine-based Allergan fell $17.69 to $92.56 on the New York Stock Exchange in trading of 2.8 million shares, seven times more than the average daily volume over the last three months. On Monday, the shares had hit a 52-week high of $114.75.
"It was important for the company, but it's not the biggest drug in their pipeline," said Mehta Partners analyst Sena Lund, who estimates Restasis has peak annual sales potential of $100 million.
He said the sell-off after the panel vote reflected investors' doubts about the high valuation of the company as much as doubt about Restasis' potential. "People are just finding a reason to sell," he said.
The FDA usually follows the advice of its expert panels but is not required to do so.
Under agency guidelines, the FDA will consider the drug in late August. Lester Kaplan, Allergan's vice president for research and development, said the company still believes that the data support the drug's approval.
"We'll continue our dialogue with the FDA," he said. "Our goal is to continue to pursue the approval of this drug."
The panel's concerns mirrored those raised earlier in the meeting by FDA reviewer Laura Lu, who said the company did not show that the drug performed significantly better than a placebo in most primary standards of the study.
Although the company showed the drug appeared to show benefits in stopping some symptoms, it wasn't enough to overcome the panel's view that the evidence wasn't compelling.
The company told the panel that the drug would offer a safe, effective treatment for a group of patients whose only alternative is artificial tears, which only treat symptoms of the disease.
In two final-stage studies of humans, Restasis showed statistically significant benefits, said Brenda Reis, Allergan's director of clinical research.
About 16% of the patients using Restasis experienced burning of the eyes, the most common side effect of the drug.
Restasis eye drops are a version of cyclosporine, a drug used to help prevent the rejection of donor organs in transplant patients and to treat severe cases of rheumatoid arthritis and psoriasis. Cyclosporine is now either administered by injection or taken orally in a pill or powder form.
Allergan is the maker of Botox, which treats neuromuscular disorders and is the only federally approved neurotoxin in the U.S., and Alphagan, the third most popular drug in the domestic glaucoma market.
The company has other development-stage products for eye care, skin care and lens care, as well as neurotoxins and ophthalmic surgical products.
Reuters also contributed to this report.
Allergan Takes a Hit
The stock of Irvine-based Allergan, trading at more than $113 earlier in the week, tumbled Wednesday after the eye-care products company failed to earn approval from a regulatory panel for its new eye treatment drug, Restatis. Closing stock prices:
June 1: $92.69
June 2: $92.25
June 3: $93.63
June 4: $96.75
June 7: $100.44
June 8: $102.44
June 9: $102.13
June 10: $102.56
June 11: $98.56
June 14: $97.00
June 15: $98.50
June 16: $101.88
June 17: $108.50
June 18: $106.50
June 21: $106.06
June 22: $103.56
June 23: $103.75
June 24: $105.69
June 25: $106.69
June 28: $107.00
June 29: $109.13
June 30: $111.00
July 1: $111.75
July 2: $112.00
July 6: $112.06
July 7: $109.81
July 8: $107.75
July 9: $106.69
July 12: $109.06
July 13: $109.44
July 14: $110.69
July 15: $112.75
July 16: $113.19
July 19: $113.25
July 20: $110.25
Wednesday close: $92.56
Source: Bloomberg News