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viewAEterna Zentaris Inc.

Aeterna Zentaris takes big hit after FDA rejects Macrilen NDA

Aeterna Zentaris (NASDAQ:EZS) (TSE:AEZ) shares plunged Thursday by more than 45 percent after the company received a complete response letter from the FDA for its Macrilen experimental test, with the regulatory body citing several problems, including a serious adverse event.

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Aeterna Zentaris (NASDAQ:EZS) (TSE:AEZ) shares plunged Thursday by more than 45 percent after the company received a complete response letter from the FDA for its Macrilen experimental test, with the regulatory body citing several problems, including a serious adverse event.

Macrilen is intended for use in evaluating adult growth hormone deficiency (AGHD), with the FDA saying that the new drug application cannot be approved in its current form.

In the response letter, the FDA takes issue with the company's pivotal trial, which it said does not meet Aeterna's stated primary efficacy endpoint as agreed to in the special protocol assessment. It also mentions a lack of verifiable source data for determining whether patients were accurately diagnosed with AGHD, and outlined a serious adverse event in the trial, which may or may not be attributable to Macrilen.

"Following the FDA's decision, we are currently reviewing the outstanding issues stated in the CRL in order to evaluate our options and future plans for MacrilenTM," said chief executive officer, David Dodd, in a statement released earlier today.

To address the problems pointed out by the FDA, the company will need to demonstrate the efficacy of macimorelin as a diagnostic test for growth hormone deficiency in a new clinical study. In addition, a dedicated study must also be conducted to evaluate further the serious adverse event that occured. 

H.C. Wainwright analyst Swayampakula Ramakanth lowered his rating on the company to neutral after the release this morning, which forced the analyst to push back his anticipated launch date for Macrilen from Q1 2015 to sometime in 2018.

He said he expects management to provide additional details regarding the next steps for Macrilen on Friday. "If management decides to pursue development of the drug, we anticipate at least a delay of three years, given the requirement for a new confirmatory clinical trial and a thorough QT prolongation study," the analyst wrote.

"Based on our assumption of a delay in Macrilen-related revenue stream to 2018 and a lower probability (25%) of launch, our valuation methodologies of price to sales and DCF analyses brings the value of the company in-line with its current market value," he added.

Shares of the Quebec-based company were last down 49.3 percent at 74 Canadian cents in Toronto.

Quick facts: AEterna Zentaris Inc.

Price: 1.33 CAD

TSX:AEZS
Market: TSX
Market Cap: $26.59 m
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