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Migraine Patch Maker NuPathe Falls on Rejection

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Few details are shared with investors after the FDA says it won't approve a transdermal patch for migraine headaches. The company's shares drop by half.

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Specialty drug maker NuPathe (PATH) is plunging this morning, it's stock price almost halved after the company said US officials rejected its application to sell its Zelrix patch to treat migraine headaches.

The response from the Food and Drug Administration "primarily contained chemistry, manufacturing, and safety questions, which the company believes it has, or shortly will have, sufficient data to address," NuPathe said in a short statement Tuesday morning.

The statement adds that the company may perform additional studies to address "other questions." The company hopes to meet with the FDA to discuss the rejection. It won't be launching its product in the first half of next year as NuPathe execs had previously forecast.

What's missing in the statement are specifics, a red flag for investors. Compounding the problem: The company chose not to hold a conference call with analysts and investors, a practice that has become customary after an important event such as a drug rejection. At least one analyst pegged Zelrix as a potential $200 million product.

Shares of NuPathe already were trading down leading up to the FDA approval deadline. (See NuPathe Migraine Patch Faces Decision Day.) Investors were miffed that the company was selling $30 million in stock to one shareholder. On Tuesday, the stock dropped 48% in pre-market trading to $2.08.

Zelrix is a transdermal patch that delivers sumatriptan, an older drug already approved to treat migraines. The patch uses an electrical current to deliver the medicine through the skin. NuPathe argued that the patch would be an alternative method to deliver sumatriptan to migraine sufferers who felt too nauseous to take the drug in pill form. The company said the patch was effective in delivering the drug to patients in company studies.

In its statement Tuesday, the company said the FDA's rejection letter "acknowledged that NuPathe established the efficacy of the migraine patch in the overall migraine population."

Previously, NuPathe had said the FDA was concerned about skin sensitivity in patients as a result of wearing the patch. The company tested Zelrix to make sure it didn't cause skin irritation. NuPathe said in a securities filing earlier this year that it may be required by the FDA to conduct a skin sensitization study.

CEO Jane Hollingsworth said in a statement that the FDA's letter "gives us confidence that we can provide the information needed to support FDA approval for our migraine patch in a timely manner."

So why not share more information now with your investors?

Twitter: @brettchase
No positions in stocks mentioned.
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