Drug Maker Ista Slump on Regulatory Setbacks

Shares of Ista Pharmaceuticals Inc. slumped more than 20% Friday after it came out that the Irvine drug maker hit regulatory snags with some of its products and several analysts downgraded it.

Ista shares were down as high 25% in early afternoon New York trading with a market value of $100 million.
Ista management said late Thursday on a conference call announcing its fourth-quarter results that it has pulled a new drug application for its Xibrom QD, a new formulation of its Xibrom drug to treat pain after cataract surgery.

The company pulled it after Food and Drug Administration officials indicated that a new clinical study would be required.
Ista also said that it’s working to clarify some information about clinical studies for T-Pred, a steroid that it’s developing to treat eye inflammation.
Ista’s shares took a big hit back in May when the FDA sent it a “not approvable” letter for T-Pred.

Some on Wall Street are doubting the future of both products:
“We do not agree with management’s contention that despite material reinvestment and reintroduced risk to both products, Xibrom QD and T-Pred will launch in late 2008 and 2009 respectively,” said analyst Megan Murphy of Lazard Capital Markets in a research note.
Lazard continues “to believe there is material regulatory risk around both of these assets and we would be surprised to see either reach the market,” Murphy said.

As for Ista’s fourth-quarter results, the drug maker posted a wider net loss of $9.9 million, as opposed to Wall Street’s expectation of an $8.5 million loss and wider than the $6.4 million loss posted in 2006’s fourth quarter.
Ista’s fourth-quarter revenue jumped 57% to $19.2 million from $12.2 million a year ago.

Source : www.ocbj.com

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