Cellegy Drug Rejected; Shares Drop
Cellegy Pharmaceuticals Inc., a South San Francisco biopharmaceutical company, said Monday that the Food and Drug Administration rejected its experimental drug to treat sexual dysfunction. Cellegy’s shares fell 38% on the news.
Cellegy, which has about 20 employees, had hoped to get approval this year for its Fortigel testosterone gel. The drug was designed to treat men with a testosterone deficiency that results in fatigue and decreased libido.
But the FDA said Cellegy’s clinical trial hadn’t proved that Fortigel was safe because it triggered above-normal levels of testosterone and failed to show that dosing changes could reduce elevated testosterone levels.
The news caught the company and analysts by surprise.
“There is still a lot of uncertainty about why the FDA turned down this drug. What side effects are they concerned about?” said analyst Larry Smith of DLS Research.
“We believed that the product would be approved,” Cellegy Chief Financial Officer A. Richard Juelis said during a conference call Monday.
He said all injected testosterone products and some applied through the skin temporarily produce higher-than-normal testosterone levels. Fortigel is applied once a day to a patch of skin.
Shares of Cellegy fell $1.99 to $3.23 on Nasdaq. The stock hit a 52-week high of $6.09 on June 19 on speculation that Fortigel would be approved.
Cellegy also is developing drugs to treat anal fissures and gastrointestinal disorders.
Cellegy has annual sales of about $1.3 million from Rectogesic, an over-the-counter treatment for hemorrhoids sold overseas, and a moisturizer sold in the U.S. For the quarter ended March 31, the company reported a net loss of $3.2 million, down from $4.4 million a year earlier.
This year, Cellegy received a $10-million sales and marketing payment from PDI Inc., based in Upper Saddle, N.J. Cellegy executives said they had enough cash on hand to operate for at least 18 months.
Cellegy Chief Executive K. Michael Forrest said in a statement that the company’s next step was to meet with the FDA “to determine what additional data might be required by the FDA ... to gain approval of” Fortigel.
Smith said there was a “fairly high probability” that Cellegy would have to begin a new clinical trial.
