Shares of Brentwood-based CytRx Corp. plunged 62% on June 18 after the Food and Drug Administration rejected a drug application from a Danish biotech firm that had partnered with CytRx.
The FDA determined that further clinical evidence is needed before it can reconsider the drug application.
CytRx had been in line for a $100 million milestone payment upon FDA approval of the drug. That payment has now been deferred indefinitely.
The drug Arimoclomol is an experimental therapy for a rare genetic disease called Neimann-Pick Type C. This progressive genetic disorder is characterized by an inability of the body to transport cholesterol and other fatty substances, or lipids, inside of cells. Some patients die within months, while others develop a chronic condition.
CytRx completed much of the early research and development for the drug and then licensed it to Copenhagen, Denmark-based Orphazyme to take it through the approval process and, if successful, to market.
As part of the licensing deal, CytRx was to have received a $100 million milestone payment upon FDA approval of the drug, as well as annual royalty payments once the drug hit the market.
Orphazyme issued a statement on June 18 saying the FDA notified the company in a letter that it has determined additional clinical evidence is necessary to demonstrate the drug’s effectiveness. If and when that evidence is presented, the FDA could reconsider the drug application.
There was no separate announcement from the FDA on its action.
The announcement from Orphazyme sent shares of both companies plunging, with CytRx shares sliding 61.7% to close at $1.08.
The drug is also pending review from the European Medicines Agency, the European Union equivalent of the FDA.
A statement from CytRx on the FDA action did not include comment from any company executives, but it featured a lengthy comment from Orphazyme Chief Executive Christophe Bourdon.
“We are disheartened by the outcome of the FDA’s review, given the urgent need for a new therapeutic option for NPC, but we remain committed to working with the regulators, with the goal of delivering arimoclomol to families managing this challenging disease,” Bourdon said in a statement provided by both companies.
“We are assessing the potential path forward in the U.S. in partnership with the FDA,” Bourdon continued. “In the short-term, we will need to reduce our costs substantially and freeze all company efforts not related to clinical and regulatory activities to support approval for NPC.”
Bourdon added that the company will focus its efforts on pursuing European regulatory approval, with possible market authorization in first quarter 2022.