Shares of Connetics (CNCT) were sinking in premarket trading Monday after the company said the Food and Drug Administration issued a nonapprovable letter for Velac Gel, an investigational new drug formulation for treating acne.
The company said the only issue raised in the letter was a positive carcinogenicity signal that was detected in a mouse study. Connetics, a specialty pharmaceutical company focused on dermatology, saw its shares slide $4.27, or 21%, to $16.50 before the opening bell.
As a result of the FDA decision, Connetics now projects 2005 total revenue of $182 million to $188 million, down from its previous guidance of $195 million to $206 million. Earnings will likely be 66 cents to 70 cents a share, vs. the prior outlook of 88 cents to 92 cents a share.
"We remain committed to bringing Velac to market, and will be working with FDA representatives to determine what is required to do so," the company said in a press release. "Despite this setback, Connetics will continue to expand its leading position in the dermatology field with four brands on the market and a robust and diverse pipeline."