UPDATED: Oral low-T drugs in the pipeline face a showdown with the FDA

An expert panel assembled by the FDA has taken a big step toward blunting the fast-growing market for low-testosterone drugs, raising a thorny issue not just for the companies that sell such remedies, but also for two biotechs trying to gain approvals for new ones.

Faced with concerns that low-testosterone drugs were being widely prescribed to middle-aged men primarily interested in boosting their fading energy and libidos, the experts voted on Wednesday to advise the agency to restrict the use of such drugs for a specific medical need. A majority want expensive cardiovascular studies assessing the risks involved in using these drugs for age-related rather than specific medical issues. And four thought that these studies should be conducted regardless of which patient population the biotechs are addressing.

In a case of extraordinarily bad timing, Clarus Therapeutics is being cast as the first test subject to face these heightened safety fears and suggested testing requirements. Later today the FDA's experts will consider the biotech's case for Rextoro, which is angling to become the first oral drug to hit the market and compete against a slate of gels that currently command a multibillion-dollar market. And while Clarus maintains that it has the data to back up its application, it will be forced to respond to an internal review that questioned missing data, raising the chances that the therapy was not as effective as billed.

Regulators also highlighted safety concerns about the drug, noting more CV-related serious adverse events including a spike in blood pressure.

Clarus isn't alone. Repros Therapeutics ($RPRX) has been building a similar case for Androxal by trying to prove it can be a safer alternative to AndroGel, the market leader in the field. The company's studies have been focused on an obese population experiencing sexual difficulties. And investors didn't overlook the implications for the biotech today. Its stock plunged about 25% by midmorning on Thursday.

Back in May, when Clarus made its second pitch on an IPO, the company clearly spelled out its plans to tackle the low-T gel competition like AndroGel from AbbVie ($ABBV) and Auxilium's ($AUXL) Testim, which has already been feeling the pinch as safety fears have already shrunk the market. Endo, another player in this market, has made a $2.2 billion offer to buy Auxilium.

"Only 31% and 14% of men continued taking T-gels six and twelve months, respectively, after commencing therapy, according to a peer-reviewed study of more than 15,000 men with T deficiency," stated the new Clarus IPO. "We believe these low adherence rates result from inconvenient application and safety concerns about T-gels. In addition, T-gels carry a "black box warning" because of their risk of unsafe transference of T to children."

But if the FDA experts get their way, the label placed on approved testosterone treatments will include some severe restrictions.

Even if the FDA adds new CV study requirements and tries to restrict the market for these drugs, though, there are plenty of marketing experts who believe that off-label use would continue to drive sales. Still, payers would be unlikely to cover any use that wasn't specifically included in the label. And a shrinking market would have a chilling effect on any other biotechs thinking of braving more vigilant regulators and payers. -- John Carroll (email | Twitter)