Medical-device developer Delcath Systems (Nasdaq: DCTH) dropped a whopping 38% yesterday after the company said the Food and Drug Administration had refused to accept the company's application to approve its chemotherapy system.

On the surface that sounds crazy. A "refuse to file" isn't an actual rejection; it just says the application isn't complete. Gilead Sciences (Nasdaq: GILD) got one last month, and even large companies such as Novartis (NYSE: NVS) and Merck (NYSE: MRK) aren't immune to the occasional gaff that delays the approval process.

Delcath says the agency wants "information involving manufacturing plant inspection timing, product and sterilization validations and additional safety information that we already planned on filing with our 120 day safety update in April, as well as additional statistical analysis clarification."

The first three don't seem like that big of a deal. As the company said, it planned to provide the information in April anyway. It's the "statistical analysis clarification" that likely has investors worried.

As Mark Twain was fond of saying, there are three kinds of lies: lies, damned lies, and statistics. There seem to be more statistical analyses than there are ways for Forrest Gump to make shrimp, but each one is only appropriate for a certain type of data set. One analysis may say that an effect is unlikely to be due to chance (i.e., it's statistically significant), but if it isn't an appropriate statistical analysis, the FDA won't let the company use it.

Is the FDA requesting a new statistical analysis and will the FDA's alternative choice produce a statistically significant result? That's the $184 million question (the amount Delcath lost in value yesterday).

Until the company clears up exactly what the problem is, investors should probably stay away. My hunch is that investors are likely overreacting, but we won't know for sure until the company gets a decision from the FDA sometime next year.

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