Shares of Irvine-based drug maker Ista Pharmaceuticals Inc. have taken a pounding in recent weeks on a clinical study setback and missed earnings expectations.
Ista’s rugged run began when an experimental dry-eye drug under development didn’t meet the main goal of a late-stage clinical study.
Ista shares closed down 31%, to a market value of about $168 million, on July 29—a day after it said that its Remura drug candidate failed to show a significant statistical improvement over a placebo in the recent study.
“Obviously, we’ve been on quite a rollercoaster ride, not only for this quarter but for this entire year,” Chief Executive Vince Anido said on Ista’s recent earnings call.
The company said it was going to change a separate clinical study that it’s conducting for Remura. Ista is continuing to analyze data from the first clinical study. It said it plans to announce the results of the second study sometime in the fourth quarter.
“We’ll make decisions about future development plans” then, said Timothy McNamara, the drug maker’s vice president of research and clinical affairs.
Q2 Miss
Ista disclosed its Remura results in conjunction with its second-quarter results. The company posted a profit of $12.8 million in the second quarter, thanks to a non-cash valuation gain of $19 million.
Ista said it had $4.2 million without the extraordinary gain. Second-quarter revenue totaled $37.1 million, up 6% from a year earlier but below Wall Street’s expectation of $41.9 million.
Growth in two of Ista’s drugs—Bepreve for eye allergies and Istalol for glaucoma—was offset by a decline in sales of its flagship Bromday/Xibrom drug to treat pain after cataract surgery, according to analyst Annabel Samimy of St. Louis-based Stifel Nicolaus & Co., which downgraded the company.
Regulatory Challenges
Ista also has dealt with a pair of regulatory challenges concerning Bromday in recent weeks.
The Food and Drug Administration’s Center for Drug Evaluation and Research proposed denying approval of Ista’s application to market an expanded dosage of Bromday based on concerns that using a bigger bottle would increase the increase of microbial infection, according to Reuters.
The center said that Ista didn’t submit adequate proof that Bromday would be safe if supplied in a larger bottle.
The FDA sent a warning letter dated July 13 about a promotional flyer for Bromday. The agency expressed concerns that the flyer indicated the drug is “safer than has been demonstrated.” Regulators also said the Bromday flyer didn’t state that the drug shouldn’t be administered while wearing contact lenses.
Ista is no stranger to being hammered and then bouncing back over FDA concerns and clinical setbacks.
In 2007, the FDA sent a “non-approvable letter” to Ista concerning T-Pred, a steroid the company is developing to treat inflammatory eye diseases. That led to a 30% drop in the company’s stock.
In 2008, its shares plunged 36% after it said that Xibrom QD, the previous name of Bromday, showed no difference in eliminating pain versus the original version of Xibrom. Investors reacted strongly because the original Xibrom accounted for 70% of Ista’s revenue at the time.
Bromday was eventually approved in October 2010. Ista has been transitioning its customers to Bromday from Xibrom, which is no longer being shipped.
Bromday/Xibrom has accounted for $36.6 million, or about 49.5% of Ista’s $73.9 million of sales so far this year.
Bepreve, which was introduced in 2009, has grown its revenue 145% over the first six months of 2010. Overall, Bepreve accounts for 22% of Ista’s revenue.
“We note, however, that Ista needs dramatic (second-half) volume and price increases to overcome Bromday’s lower pricing and meet guidance,” analyst Samimy wrote in her note.
Ista has said it expects full-year 2011 revenue to come in at $175 million to $190 million. Analysts are looking for the drug maker to have revenue of $180.8 million this year.
