Faced with a dilemma, the FDA rejects Cempra’s antibiotic, demands big safety study

Cempra delivered the FDA’s decision on its antibiotic solithromycin on Thursday morning, a day late and about $185 million short.

Caught on the horns of a dilemma posed by clear evidence of liver toxicity and a growing demand for new antibiotics, the FDA has decided to reject Cempra’s new antibiotic, demanding a large new safety study before reconsidering its position. And the agency flagged a warning that any future label will carefully restrict its use, which will damage its market potential.

Cempra’s stock plunged 57% by the end of the day, wiping out about $185 million in market cap as investors responded to the worst scenario the biotech could have expected.

In a detailed outline of the FDA’s CRL, Cempra noted that the agency was unsatisfied by the relatively small number of patients that had been recruited to determine how safe the antibiotic is. Regulators want them to augment that with a study involving 9,000 patients. Cempra added:

The CRL noted that while the FDA reserves comment on the proposed labeling until the NDAs are otherwise adequate, even in the absence of a case of Hy’s Law or of another form of serious DILI in future studies, labeling will need to include adequate information about the potential for hepatotoxicity, limiting use to patients who have limited therapeutic options and limitations regarding duration of therapy. A comprehensive plan for post-marketing safety assessment including an enhanced pharmacovigilance program would also be required.

Regulators also cited manufacturing issues in the CRL.

Cempra $CEMP faced a big challenge going into today’s announcement. An expert panel had offered its marginal support with a 7-to-6 vote in favor of an approval. But they spent much of the day fretting over clear signs of toxicity, which were also flagged in the agency’s internal review. The main question at the end of the day was whether the FDA would approve the antibiotic and then place a series of possible market-killing restrictions on it or simply reject it until they could get a better safety profile.

Both the FDA and the panel, though, had to balance their very real safety concerns against a growing need for new antibiotics in an age of rising drug resistance.

Cempra kept the market waiting for the bad news. The company faced two PDUFA dates for their antibiotic’s oral and IV formulations on Tuesday and Wednesday. The late news on the double rejection followed by the demand for a new trial and future restrictions was enough to leave some analysts wondering if this therapy has any future at all. From Baird’s Brian Skorney:

At this point, we don’t see how Cempra moves forward with solithromcyin. The cost of running a 9,000 patient study without revenues from the drug to help support the burn will be extremely burdensome. Despite having ~$225M in cash now, the average R&D burn in 2014-2015 was between $15M and $20M per quarter when the Phase 3 studies were being run, and that’s only in one-tenth the number of patients the FDA is asking for. Further, even if approved, severe labeling would likely deter physicians from using it in the broad, front-line macrolide setting Cempra was hoping for. As a result, we are lowering our price target to $2 on lower probability of success and higher cash burn.

Solithromycin is designed to work by meddling with bacterial protein synthesis. And with a large number of community-acquired bacterial pneumonia patients (CABP) resistant to the leading antibiotic on the market, the Chapel Hill, NC-based biotech has won close attention for its research work.

Cempra is one of just a few small biotechs which have been advancing late-stage antibiotics in the pipeline. Nabriva, Achaogen and Paratek are three more players in this field, while Big Pharma largely remains leery of a sector well known for high risks and marginal payoffs. Today’s rejection leaves dwindling near-term shots at adding to the number of antibiotics available to the public.

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VP Oncology Biology
Skyhawk Therapeutics Waltham, MA
Director Process Development
Elektroki Boston, MA
Director Process Development
Elektroki Boston, MA
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Recursion Pharmaceuticals Salt Lake City, UT

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