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Pharmaxis shares plunge after AdComm rejects new CF drug

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An FDA advisory committee handed Pharmaxis a major setback in its quest to get a new cystic fibrosis treatment onto the U.S. market, voting that the Australian biotech couldn't prove Bronchitol was safe and effective. The news swiftly crushed its stock price, which plunged 46% even as the biotech quickly followed up with a $40 million financing deal.

NovaQuest Pharma Opportunities Fund III set up the $40 million financing, which was announced shortly after the negative FDA advisory committee vote.

The FDA previously granted the dry powder Bronchitol an orphan drug designation for the treatment of patients with CF. The drug, which is meant to clear mucus in the lungs of CF patients, is already being used in patients aged 6 years and older in Australia and for patients 18 years and older in the European Union.

The Pulmonary-Allergy Drugs Advisory Committee raised questions about the safety and efficacy of the drug, saying in a document that there was missing data in the Bronchitol studies as a result of a high patient dropout rate--66% of patients completed one study while 85% made it through another.

"The committee vote is disappointing, however, we are aware that these recommendations are not binding on the FDA and we will continue the process of working with the FDA to bring Bronchitol to patients in the U.S.," Pharmaxis CEO Alan Robertson said in a statement.

It's not unusual for FDA committees to raise safety concerns about drugs and the recommendations are not final--though they are generally followed by the agency. The FDA will formally decide on Bronchitol's approval by the March 18 PDUFA date.

Meanwhile, Pharmaxis is moving forward with a financial agreement with NovaQuest, in which Pharmaxis will receive an initial minimum investment from NovaQuest of $20 million within 30 days to support the continued development, manufacturing and commercialization of Bronchitol for CF in the U.S. and EU. If the company meets certain commercial and regulatory performance criteria, NovaQuest may invest up to an additional $20 million in the Sydney-based pharma company beginning on Jan. 30, 2014.

Under terms of the agreement, NovaQuest will receive payments based on the U.S. and EU sales revenue of Bronchitol for a period of 8 years in the EU and 7 years in the U.S.

- get the press release on the financing deal
- read the FDA briefing (pdf)
- here's the company's statement

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