BOONTON, NJ ( TheStreet) -- While a lot of investor attention will hopefully be focused on Depomed's ( DEPO) FDA panel and the live-blogging exploits of Adam Feuerstein, Jason Napodano and yours truly today, I wanted to share some thoughts about a penny stock with a different but still very important FDA advisory panel taking place tomorrow. Unigene Laboratories ( UGNE) faces an uncertain future. The past 12 months have been a real challenge -- marked by accounting irregularities, delays in securing license agreements for pipeline assets and diminishing cash unlikely to last past the second quarter. Last December, Unigene (not surprisingly), announced plans to "explore strategic alternatives." The genesis for Unigene's troubles was an announcement last July by the European Medicines Agency (Europe's equivalent to the FDA) relating to use of the hormone calcitonin to treat osteoporosis. European regulators approved calcitonin in 1973, but following an extensive review, the EMA concluded its long-term use was associated with a small but increased risk of cancer. The benefits of using calcitonin-containing products to treat osteoporosis no longer outweighed the safety risks, the EMA concluded. When the EMA decision on calcitonin was announced, Unigene's stock price fell 75%. Current formulations of calcitonin include subcutaneous injections and nasal sprays, so an oral formulation is obviously attractive. Unigene owns an oral calcitonin product, which was licensed to privately held Tarsa Therapeutics. Unigene owns a 20% stake in Tarsa and is eligible to receive sales-related milestone payments and royalties on worldwide sales, if the drug is ever approved. Top-line, positive results from Tarsa's phase III trial of oral calcitonin were presented in March 2011. The study, conducted pursuant to a Special Protocol Assessment (SPA) agreement with the FDA, demonstrated that oral salmon calcitonin was significantly superior to placebo and non-inferior to nasal salmon calcitonin spray in increasing bone mineral density at the lumbar spine after one year of treatment. Unigene had originally targeted a quick FDA approval submission in the fourth quarter 2011, but that never happened. In January 2012, Unigene said Tarsa delayed the FDA filing to the second half of 2012. Tarsa also appealed the EMA's decision to curtail use of calcitonin in Europe, to no avail. To date, the Unigene/Tarsa oral calcitonin has still not been filed with FDA.
Getting back to this week's important Unigene FDA catalyst: On Tuesday, March 5, FDA is convening a joint meeting of the Advisory Committee for Reproductive Health Drugs and the Drug Safety and Risk Management Advisory Committee to review and discuss the available data regarding the safety and efficacy of calcitonin salmon products for the treatment of osteoporosis. Experts on the panel will be asked to discuss whether available data support the continued use of calcitonin salmon medications for the treatment of osteoporosis (i.e. that the benefits of use outweigh the risks.) In addition, panel members will be asked to comment on whether data on bone fractures should be required for approval of any future salmon calcitonin product. This is a critical vote, as the current Tarsa study, while conducted under an SPA agreement, did not examine fracture data as a primary outcome measure of efficacy. In the extensive FDA briefing document released last week in advance of the panel, the agency's review staff found the potential for cancer risk associated with calcitonin use appears plausible, and certainly cannot be ruled out with the data reviewed. The FDA's position might be interpreted as more lenient than the EMA's stance. However, the FDA review goes on to say that when evaluating the risks and benefits of calcitonin salmon therapy for the treatment of postmenopausal osteoporosis, data on fracture reduction rates is a critical measure of efficacy. Unfortunately, available clinical studies for calcitonin and fracture reduction are riddled with flaws and limitations, and thus their results are inconclusive. Of more concern, a single three-year study conducted by Novartis ( NVS) with SMCO21A-2303 (another oral salmon calcitonin drug in development) in postmenopausal women with osteoporosis showed increases in bone mineral density, but no reduction in the risk of fractures. The FDA concluded that despite three fracture trials conducted, there are still significant questions regarding calcitonin salmon's effectiveness in reducing fractures in postmenopausal women. This lack of efficacy when combined with the potential for a cancer risk associated with calcitonin salmon therapy raises concerns about the overall risk and benefit assessment for calcitonin salmon products in the treatment of postmenopausal osteoporosis. Unigene is bordering on insolvency and I highly question whether its partner Tarsa will ever be able to submit their FDA approval filing for oral calcitonin. However I believe Unigene's stock will be impacted short term by the outcome of Tuesday's FDA advisory panel vote. A positive vote in favor of continuing the use of salmon calcitonin for osteoporosis might lead to a 100%-plus swing in Unigene's stock price, even if the advisory panel recommends that future products require fracture studies. A negative vote from the panel will only serve as an additional nail in the Unigene's coffin. Disclosure: Chaudhry has no position in any of the companies mentioned in this article.