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Coulter Stock Falters Amid Worries on Bexxar Filing

The stock drops 12% as investors speculate the filing hasn't been accepted by the FDA.


Food and Drug Administration's

arcane guidelines made for some interesting afternoon trading in

Coulter Pharmaceuticals



The stock, increasingly the subject of a nasty dogfight between optimists and pessimists, slipped 11% Tuesday as investors spread word that Coulter's filing for cancer antibody


wasn't accepted by the FDA. But both Coulter and its partner,

SmithKline Beecham

(SBH) - Get Free Report

, insist that all is well, saying the agency has another two weeks to accept the paperwork.

The company on June 30 filed a biologics license application, or BLA, covering Bexxar, a radioactive antibody that fights the blood-borne cancer known as non-Hodgkin's lymphoma. Investors have been bandying about a 45-day deadline for the agency to act, but Coulter and SmithKline say that deadline merely requires that the FDA meet to assess the filing. The actual deadline is 60 days, the companies say.

Sylvia Wheeler, a spokeswoman for Coulter, acknowledges that executives at the South San Francisco, Calif., biotech "haven't received notification" from the agency. But she continues that "the 45 days is an internal clock" at the FDA.

As for the rumor that the FDA hasn't accepted the filing, she says, "That's definitely not true. At least they haven't told us, if it is true." Wheeler says there has been no change in the company's expectation that it will have a six-month, priority review and that it will hear a thumbs-up or thumbs-down verdict by the end of December.

The rumors sent the stock down 3 3/16 to 26 3/16 in heavy trading Tuesday. But at least one hedge-fund manager in New York got longer this afternoon, thinking that the worries were misplaced. He said the FDA has begun visiting clinical sites that tested the drug. "The way the FDA is acting is consistent with the filing being accepted," he says.

Not everyone shares Coulter's or the hedge fund manager's optimism.

"Knowing these guys, they would have announced if it had been accepted," says another manager of a small hedge fund who is short the stock. Typically, companies issue press releases when the FDA "accepts" a filing, or determines that the filed documents fulfill approval criteria. Data supporting a filing still need to prove the drug works before the drug is approved, of course.

As a matter of policy, the FDA doesn't comment on whether it's accepted filings or not.

In a note to clients today, David Hines, an analyst for

Avalon Research

, which rates Coulter a sell/sell short, said, "Since the company has failed to announce the FDA's acceptance of the Bexxar BLA filing within the 45-day window, we believe that the bull story has become very risky. We can reasonably conclude that the FDA has a problem with the BLA submission."

Avalon thinks there are several potential issues with the filing. For one, the company has not completed a study comparing Bexxar, a "hot," or radioactive antibody, with the antibody alone. Hines, in his note, says the company needs to complete this study before the drug can be approved. Avalon contends that the company also needs to prove that the antibody it uses from different manufacturers is consistent. "Either it goes down now or it goes down six months from now," says the hedge fund manager who is short. "Doesn't matter to me."