No Quick Approval Here

It looks like Navidea Biopharmaceuticals (NYSE: NAVB  ) won't have a quick turnaround to gain approval of Lymphoseek, a diagnostic used to map lymph nodes that may contain cancer cells.

Earlier this month, the company announced that Food and Drug Administration had issued a Complete Response Letter because the agency had issues with the manufacturing of Lymphoseek.

At the time, Navidea wasn't willing to put a timeline on the response but implied it was a minor issue having to do with Good Manufacturing Practices at its contract manufacturer. GMP issues are easier to deal with than changing how a product is made or how a company confirms reproducibility. Just ask Discovery Laboratories (Nasdaq: DSCO  ) that took seven years to clear up manufacturing issues.

The issues could still be simple, but they're not that simple. Yesterday the company disclosed that it's scheduled a meeting with the FDA for the middle of next month. Having to sit down with the FDA for a meeting speaks volumes about how complex the issue is. If it was a minor issue -- something that could be cleared in two weeks like Forest Labs (NYSE: FRX  ) and Mylan (Nasdaq: MYL  ) did -- the details of what needs to be completed could likely get hashed out via the phone.

There's another sign that this isn't a minor issue: Navidea said it expects the FDA to classify its response to the CRL as a class 2 response, which would result in a six-month review period. If it was a minor issue without much additional documentation required, the agency would give the response a class 1 review that shortens the review period to just two months.

The added four months isn't ideal, especially since Navidea is running low on cash, but the bigger worry is that the more complex the manufacturing issue, the more risk there is that Navidea can't satisfy the FDA on its next attempt. Since we get only one side of the story, investors should make sure they're being adequately compensated for the added risk they're taking on.

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Read/Post Comments (4) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 25, 2012, at 8:44 PM, michaelchin77381 wrote:

    As LifeSci already mentioned, don't get too hung up on Class 1 or 2. Any facility reinspection is an automatic Class 2, which gives the FDA UP TO six months to reinspect.

    But it has no bearing on when they actually WILL reschedule the inspection.

    "But more important than the classification is the amount of time that the Agency needs to review the responses to the issues raised in the CRL. Clearly, this depends on the scope of the CRL. Since the Lymphoseek CRL has a singular focus pertaining to third-party manufacturing issues and not to the efficacy or safety of Lymphoseek, we believe it is possible that the FDA could complete their review in a very timely manner regardless of classification." - LifeSci Advisors

  • Report this Comment On September 26, 2012, at 1:06 PM, ryno1ryno wrote:

    When you find yourself pumping a stock on the way down based on bad news et al, you should sell your position and wait until the fall is fully realized Michael.

    Then, you can get in again after it has stabilized. Afterall, you have quite a while.

  • Report this Comment On September 26, 2012, at 10:52 PM, thalio wrote:

    I read this similarly, Michael. I don't know any precedent for a CGMP issue, regardless of how minor, getting cleared up "over the phone." The meeting is scheduled as a matter of course and says nothing about the time line for re-submission.

  • Report this Comment On September 27, 2012, at 5:45 PM, michaelchin77381 wrote:

    To Mr. Ryno,

    What do you consider "quite a while?" When NAVB received the CRL it went down to 2.17. I bought more at 2.25. Was the fall realized at this level?

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