A2 Milk shares drop after US deferment
AUCKLAND: A2 Milk’s share price fell sharply after it said the US Food and Drug Administration had deferred the company’s request to send infant formula to the United States to help alleviate the product shortage there.
In a statement to the NZX, a2 Milk said it received notification from the FDA deferring further consideration of the request for enforcement discretion to import infant milk formula products.
‘‘The company has also subsequently been advised by the International Dairy Foods Association that equivalent letters have been sent to all pending enforcement discretion applicants, indicating that the FDA is deferring any further review at this time of all pending applications,’’ a2 Milk said.
By the close yesterday, a2 Milk’s shares were down 42c or 7.46% at $5.21.
The stock has been climbing sharply over the past month on the back of expectations it would gain FDA approval, along similar lines to the approval given to its Australian competitor, ASXlisted Bubs.
Early this month, a2 Milk, whose products contain just the a2 beta protein and not the a1 beta protein, poured cold water on expectations it would soon gain FDA approval.
The company said at the time that there was no certainty as to the outcome of the application or the timing of any approval.
A2 Milk’s main infant formula market is China. Analysts have debated whether the ability to send stock to the US would be a help or a hindrance for the former high flier, whose earnings have come under pressure in recent years.
In February, America’s biggest infant formula maker, Abbott, recalled product and stopped production at one of its facilities in Michigan after bacteria was found at the site, which led to a national shortage.