Immunomedics sheds $1B in value as FDA rejects drug candidate
Immunomedics expected to start 2019 by transitioning into a commercial stage biotech. After developing drugs for 37 years, the New Jersey-based company was confident its lead candidate would receive a regulatory OK this week.
But the approval didn't happen. To Immunomedics' surprise, the Food and Drug Administration issued a Complete Response Letter (CRL), which the company disclosed Thursday night.
Executives provided few specifics on the rejection in a Friday morning call with investors, after which the biotech's share price fell by a third — reflecting a market value drop of slightly more than $1 billion.
The company's cancer drug, sacituzumab govitecan, was under review for accelerated approval as a treatment for patients with metastatic triple-negative breast cancer who have received at least two prior therapies for metastatic disease.
CEO Michael Pehl reaffirmed his belief in the drug on the Friday call, noting the CRL focused on matters concerning chemistry, manufacturing and controls. Pehl said no new clinical data would be needed to resolve the agency's issues, which he believes are all addressable.
Despite that assurance, analysts on the call peppered the executive with questions about the rejection that he couldn't answer. Analysts asked, for example, if issues the FDA raised following a facility inspection last August were cited in the rejection letter.
Pehl demurred, saying the company only recently received notice from the FDA and needed more time to digest it. He said Immunomedics would consult with regulators to develop a plan forward.
When questioned about how and when the company expects to talk with the FDA during a prolonged government shutdown that has affected the agency's ability to conduct such meetings and conversations, another company exec said they "don't have full clarity on that."
"Like everyone else, we hope it ends very soon," said Robert Iannone, the company's head of R&D and chief medical officer.
Company execs said Immunomedics would push for a Class 1 resubmission, which typically gets an agency response within two months, but also admitted it could not rule out a Class 2 filing, which brings a six-month timeline for review.
While the logistics and timeline for resubmission remain fuzzy, Immunomedics is also facing questions regarding a Form 483 it previously received from the Food and Drug Administration.
A complaint filed in late December by law firm Bernstein Leibhard LLP, for example, says the company received the Form 483 between Aug. 6 and Aug. 14 but did not disclose that fact in regulatory filings with the Securities and Exchange Commission.
The form became public in December, when FDAnews.com published an article about the document, writing that Immunomedics' Morris Plains, New Jersey, manufacturing facility had run afoul of agency investigators. Form 483s are not automatically provided by the FDA, but are public documents and open to records requests.
"The investigation revealed that the firm’s quality control unit didn't have the authority to investigate critical deviations that occurred at the facility — namely a February 2018 data integrity breach, which didn't trigger a deviation," the FDAnews.com report stated.
In the following days, Immunomedics' stock dropped roughly 20%. In a Dec. 20 note to investors, Jefferies analyst Chris Howerton called the perceived weakness in the company "overdone," reiterating confidence in a January approval for sacituzumab govitecan.
In a Jan. 18 note, following the CRL, Howerton lowered the price target by about one-third from $30 to $21 and said he expects potential approval in 12 months or longer through a Class 2 re-submission.
In wake of the regulatory setback, analysts now have many questions and few answers.
"We're not being cagey here," Iannone said. "It's just a matter of we need to have that interaction to understand what it is that will finally resolve the issues and allow us to get approval."