Health Care's 10 Dumbest Things, Part Two

2. Encysive's Losing Battle

Encysive (ENCY Quote) sure knows how to pick a fight.

The small Houston biotech wasted most of 2007 arguing with the very agency that could decide its fate.

It all started in early 2006, when the U.S. Food and Drug Administration sent an "approvable letter" suggesting that Encysive perform further clinical trial work on its key hypertension drug, Thelin. Hoping to avoid that time-consuming process, Encysive kept trying to impress the FDA with the same old data instead.

The company received the same old verdict -- through three different approvable letters -- in response. Go figure.

Still, to investors, each of those letters came as some surprise. You see, Encysive never disclosed the specific nature of the FDA's concerns and insisted that those obstacles could be overcome. Investors, assuming that Encysive had stuck to its guns for good reason, were no doubt stunned to learn the truth.

After fielding its last approvable letter this spring, Encysive finally revealed that the FDA had rejected Thelin because it "did not demonstrate the evidence of effectiveness needed for approval."

It's tough to imagine a verdict any clearer than that. But leave it to Encysive to push the issue one more time. Complaining that it had met its goals, but that the FDA had moved the goal posts, Encysive filed a formal appeal. Never mind that, years earlier, Encysive had fallen short of its original targets and therefore changed the rules itself.

The company's fourth and final rejection from the FDA seemed almost inevitable. It was. But only after officially losing its appeal this fall, with no obvious recourse left, did Encysive finally break down and take the FDA's advice.

Dumb-O-Meter Score: 94. "Annnnnnnd the award for Most Stubborn Management Team of the year," proclaimed the Motley Fool, "goes to Encysive."