Investors hammered Irvine eye drug maker Ista Pharmaceuticals Inc. earlier this month after the company said its steroid eye drug received a “not approvable” letter from the Food and Drug Administration.
The news sent Ista’s shares down some 30%. It had a recent market value of $170 million.
The FDA didn’t find sufficient clinical results to approve T-Pred, which is being developed to treat inflammatory eye diseases, Ista said in a release.
“While we are disappointed by the FDA’s decision, Ista is committed to bringing T-Pred to ophthalmologists and patients,” said Vicente Anido Jr., Ista’s chief executive. “We believe our clinical study met the endpoints that Ista and the FDA agreed to.”
Ista said it’s requesting an FDA meeting to decide on steps the company needs to take to get approval for T-Pred.
An analyst with Lazard Capital Markets, Megan Murphy, downgraded Ista to “hold” in the wake of the decision.
“Without T-Pred, uncertainty increases as to (Ista’s) ability to leverage its commercial infrastructure,” Murphy said in a research note. “We see profitability pushed back by two years to 2011 and a need to return to market by the end of (2008’s first quarter) to support pipeline developments.”
The situation, according to Murphy, places “material pressure” on a once-daily dosage of Ista’s Xibrom drug, which treats pain after cataract surgery. Ista needs to see the new Xibrom dosage approved and launched in a timely fashion, she said.
T-Pred was supposed to contribute to 30% of Ista’s revenue in 2009 because its market is twice the size of Xibrom’s, according to Murphy.
Ista has been one of the fastest growing local companies by sales in recent years. Yearly sales have gone from $300,000 in 2003 to some $20 million today.
The growth has come from the commercialization of Ista’s first three drugs, Istalol, Vitrase and Xibrom, all of which have come out during the past three years.
Profits have been more elusive.
In the first quarter, Ista lost $11.5 million, compared with a net loss of $10.7 million a year earlier. Research and selling, administrative and general expenses continue to rise.
Sales in the first quarter rose 90% to $10 million.
Like other developing eye drug companies in Orange County, Ista has ties to Allergan Inc., OC’s largest drug maker. Irvine-based Allergan derives nearly half of its some $3.5 billion in yearly revenue from eye care drugs.
Ista Chief Executive Anido served as president of Allergan’s Americas region from 1993 to 1996. Chief Financial Officer Lauren Silvernail, Kirk McMullin, vice president of operations, and Tom Mitro, vice president of sales and marketing, are other Ista executives with Allergan backgrounds.
The company was started in 1992 as Advanced Corneal Systems Inc. and changed its name to Ista in 2000.
InSight Extends Offer
InSight Health Services Holdings Corp., a Lake Forest provider of medical scanning services, said it extended to Wednesday its offer of nearly all of the company to its creditors in exchange for forgiving a huge amount of debt.
InSight said as of May 1, about $110 million of debt had been traded for shares. InSight is offering some 87% of its common stock in exchange for about $200 million in debt due in 2011.
In an earlier interview, Bret Jorgensen, InSight’s chief executive, said the company was looking to get 95% of its debt holders on board with the offer and complete it in the second quarter.
The offer is considered the carrot. The stick: a possible bankruptcy filing if the exchange offer didn’t pan out, according to InSight.
InSight, which runs nearly 220 mobile and fixed-site diagnostic imaging centers in about 30 states, wants to get its debt down to $300 million.
As of Dec. 31, InSight had $503 million in debt.
More Love for Quality Systems
Stock watchers’ love affair continues with Irvine-based Quality Systems Inc., which makes software that helps doctors and dentists manage their practices.
John Reese, writing for RealMoney.com, said Quality’s stock hasn’t stumbled even though its price-to-earnings ratio has dropped to 34 from 43 in the past two years.
The company has a market value of more than $1 billion.
That’s “an increase of nearly 50% over the last 21 months. That’s a wonderful increase,” he said.
Growth for Quality shows no signs of abating, according to Reese.
“And the same is true of healthcare costs,” he said.
Quality’s products help healthcare providers and managers rein in costs by automating various processes, such as healthcare records.
Bits and Pieces:
Mark Smith, chief executive of the California HealthCare Foundation, headlines CalOptima’s “Strengthening Organizations through Community Alliances” conference on Thursday from 9 a.m. to 3 p.m. at Concordia University in Irvine. Advance registration is required. Call (714) 246-8672 to get a brochure and more details The Women’s Health Center of South Orange County, a medical practice, moved from Mission Viejo to South Coast Medical Center in Laguna Beach. Separately, physician George Shahinian opened the Laguna Beach Sleep Center on South Coast Medical’s campus. The center is dedicated to treating sleep disorders VQ OrthoCare, an Irvine medical products company, opened a clinic in Marina del Rey for spinal care and sports medicine The Rotating Gamma Institute, a medical practice, opened next to Anaheim Memorial Hospital. The institute uses a radiation device made by San Diego-based American Radiosurgery Inc. to treat brain tumors.
