Replidyne: Silver Lining in FDA Letter

Following Replidyne’s (NASDAQ: RDYN) receipt of a non-approvable letter from the FDA for Faropenem® there are a numerous reasons why there is a sliver lining in this non-approvable letter cloud.

First, and of paramount importance, the FDA had no SAFETY or Chemistry Manufacturing and Control issues. Second, the IP which covers composition of matter and methods of manufacturing are in place through 2015 with up to three additional years of protection through certain extensions. Third, a strong management team is backed by cash on hand of $134M (includes IPO proceeds) with a burn of approximately $30M however, certain additional capital needs for the required superiority and microbiological studies may be absorbed through a previous agreement with their partner Forest Labs (NYSE: FRX).

In short, a Post Action conference with FDA will be held. The news out of that meeting will provide insight as to the structures of the requisite studies to address the lack of placebo controlled data; recall that the studies were designed as non-inferiority (Faropenem® vs. current approved treatment). I would expect perhaps some additional information on 26 October, their scheduled earnings release date.

Something To Pay Attention To?

Merrill Lynch believes a decision should be reached by the FDA regarding Replidyne’s (NASDAQ: RDYN)Faropenem® approval for acute bacterial sinusitis by or before 20 October. One may be inclined to pay close attention to next Tuesday or Wednesday’s FDA panel review of rival Oscient Pharmaceutical (NASDAQ: OSCI) for Factive® also for the treatment of acute bacterial sinusitis and already approved for pneumonia and bronchitis.

In question next week will be the FDA’s updated guidance for the use of placebo controlled trials for new antibiotics such as Faropenem® and Factive®. If the FDA suggests the necessity of placebo controlled trials for either of the candidates it may negatively impact approval and launch timing. However, Merrill Lynch does not believe that such a trial will be necessary for Faropenem® based upon its safety profile. Replidyne may likely move in some directly or inversely correlated manner to OSCI as soon as the news of the panels decision is released.

Both Merrill Lynch and Cowen & CO. are now covering Replidyne. I have not determined what if any IB relationships may exist between the entities but certainly plan to answer that question.

Feather in Colorado's Cap

Happy to see that Replidyne, Inc. (Nasdaq: RDYN) began trading this morning at 11:00am! Next stop...approval for Orapem™!