Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of pharmaceutical company Impax Laboratories (IPXL) dropped as much as 10% after the Food and Drug Administration sent the company a complete response letter, or CRL, for its idiopathic Parkinson's disease drug, Rytary.
So what: The CRL from the FDA was issued with regard to the supportive manufacturing and distribution aspect of Rytary, and it requested a re-inspection of the company's Hayward manufacturing facility. Impax, however, had removed Hayward from its list of supportive manufacturing facilities prior to its new drug application submission due to a warning letter from the FDA regarding manufacturing at the facility in 2011.
Now what: Impax's management is basically shrugging its shoulders at the moment because I don't think it has the slightest clue what the FDA is looking at with regard to Rytary's manufacturing process. It's going to take some very close hand-in-hand cooperation from both sides to resolve this, meaning it could be quite a while before Rytary gets resubmitted. Rytary's efficacy and safety don't seem to be the question here, so we're talking about a drug whose eventual approval appears very likely. This is one of the primary reasons Impax isn't tanking, and a reason why GlaxoSmithKline (GSK -0.92%), the owner of Rytary's rights outside the U.S., is hardly budging, either. But, it's still going to be about another six months to a year out before we get a verdict.
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