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's happening: Shares in The Medicines Company (NASDAQ:MDCO) fell by as much as 10% earlier today following news that a drug from a competitor that is similar to a drug being developed by The Medicines Company hit a roadblock.
Why it's happening: AcelRx Pharmaceuticals (NASDAQ:ACRX) was dealt a blow today when the FDA asked for an additional trial for its pain drug device Zalviso. The delay follows the FDA rejection of that pain drug device last year and casts doubt on The Medicines Company's similar pain drug device, Ionsys.
Ionsys is a fentanyl opioid product that delivers pain medicine through a transdermal device. Ionsys was originally developed by Incline Therapeutics, a company that The Medicines Company acquired in 2012. Ionsys launched in Europe in 2008; however, due to questions regarding the device's stability, the device was recalled. It has not been launched in the U.S., but The Medicines Company had hoped to win an FDA approval on April 30th. The Medicines Company also expects the EU to weigh in on a potential European relaunch later this year.
Now what: It's not shocking to learn that the FDA is very cautious when it comes to opioid therapies, and given Ionsys' marketplace stumbles in the past, it's also not too surprising that investors are nervous that the FDA's decision on AcelRx could signal a thumbs down for The Medicines Company in April. However, that's far from a given.
During the company's fourth quarter earnings call, The Medicines Company reported that it had already dealt with an FDA request in December for a human factor study to evaluate whether or not providers and patients fully understood Ionsys' instructions for use. The Medicines Company noted that study went off without a hitch, so it's certainly possible that was the final hurdle ahead of an approval next month. Regardless, even if Ionsys fails to win over regulators, it's not like this is The Medicines Company's only product. The company's sales totaled $724 million over the past 12 months, leading analysts to estimate that it could deliver EPS of $0.29 this year. Regardless, there are a few question marks here, and that's enough to keep me on the sidelines on this one.