Akorn's drug pipeline 'held hostage' with FDA warning letter
- Akorn disclosed Wednesday that it had received a warning letter from the Food and Drug Administration, citing numerous violations at the company’s Decatur, Illinois manufacturing facility and calling past responses to agency critiques inadequate.
- The generics company said it will respond to the FDA within the required 15 working days and will continue production. “The company has full confidence in the quality of products manufactured at the Decatur facility,” Akorn said in a Jan. 9 statement.
- Shares of the company dropped about 12% to close at $3.48 yesterday.
The most immediate impact of the Jan. 4 warning letter is that the FDA can withhold approval of any New Drug Applications until it’s satisfied with Akorn’s corrective actions. Raymond James analyst Elliot Wilbur estimated that fully resolving all the issues could take 18 to 36 months, holding “the vast majority of Akorn’s injectable pipeline hostage.”
Akorn can ill afford new issues. The company’s shares have plummeted roughly 90% in the last 12 months, in large part after German drugmaker Fresenius Kabi terminated a $4.3 billion agreement to buy Akorn for $34 a share.
When Fresenius pulled out of the merger deal, it cited “material breaches” of FDA data integrity requirements, an issue the agency brought up in the warning letter. The FDA asked for a comprehensive investigation into inaccuracies in data, as well as a risk assessment of “the observed failures on the quality of your drugs.”
In its letter, the FDA also stated Akorn failed to follow a number of procedures designed to prevent microbiological contamination of products and failed to follow a program to test stability characteristics of drugs manufactured at the plant.
Akorn already has some actions underway to fix problems with data integrity, and the cost of all the remediation will likely top $40 million over several years, Moody’s analysts estimated.
The Decatur plant isn't alone in drawing FDA scrutiny. In May, the company got a lengthy inspection report detailing issues with quality control at its Somerset, New Jersey facility.
The latest warning also raises the risk that the FDA will be more stringent in future inspections at any Akorn plant because many of the issues found at the Decatur facility are systemic, Raymond James' Wilbur stated in a Jan. 9 note to investors.
“FDA seems to be questioning key foundational aspects of the company’s stability programs and overall quality programs,” wrote Wilbur.