The FDA's reasons for rejecting the Chiasma drug Mycapssa closely mirrored the bear thesis detailed last week, ahead of the agency's decision.
Shares of Chiasma are down 55% to $4.61 in Monday pre-market trading. The stock closed Friday at $10.04.
Mycapssa is a capsule containing octreotide, a somatostatin analog, combined with a "penetration enhancer" to allow for oral delivery. Essentially, Chiasma tried to turn a currently approved, injectable drug for acromegaly into one that patients can swallow.
Turning shots into pills has long been a technological challenge, and Chiasma hasn't figured out the solution with Mycapssa, according to the FDA's complete response letter which turned down the company's request for approval.
If Chiasma wants to resubmit Mycapssa to the FDA, the company will have to conduct another phase III clinical trial, FDA said. The agency also "strongly recommended" the company design a randomized, double-blind, controlled study instead of the single-arm study conducted previously.
Again, all these deficiencies in the Mycapssa application were known ahead of the FDA's rejection by anyone bothering to dig into the drug's published data. Chiasma even admitted many of the same potential problems in the risk-statement section of its filings with the Securities and Exchange Commission.
On a call with investors Monday morning, Chiasma CEO Mark Leuchtenberger said he was "surprised and disappointed" by the FDA's Mycapssa rejection. "We respectfully disagree," he added.
Leuchtenberger should read his company's SEC filings more closely.
Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.