Drug firm delays FDA filing to give workers a holiday rest
Company has no revenue, decision has analysts’ ‘spidey senses’ tingling
It’s a holiday classic — the heartwarming tale of a drug company and its delayed filing.
But investors are responding like they got a lump of coal in their stockings.
Radius Health Inc. said Tuesday it would delay submitting its application for approval of AbaloparatideSC, a once-daily osteoporosis drug, to U.S. regulators until the first three months of 2016 — in part to give its workers an easier time over U.S. Thanksgiving and Christmas. That’s in spite of its earlier forecast that it would have the application filed by the end of 2015. The stock fell 11 per cent Tuesday on news of the delay, though it recovered slightly with a 1.3-per-cent gain on Wednesday.
In an interview, chief executive officer Robert Ward said workers deserved some rest after working long hours to get a marketing application to European regulators. That explanation didn’t fly with analysts.
“I’ve never heard of this before, that they’re not going to file by the end of the year because they don’t want to put too much pressure on their employees?” said Ira Loss, an analyst at Washington Analysis. “Most companies, when they are near the finish line, they put their guts on the table to get it done and get it to the FDA (U.S. Food and Drug Administration) — that’s what it’s all about.”
“I’ve never heard that excuse — ever,” Loss said. “I’m stunned, abso- lutely stunned.”
Radius, which went public in June 2014, doesn’t have any revenue right now. Hopes are high for Abaloparatide, which is projected by analysts to produce almost $500 million (U.S.) a year in sales by 2019.
By delaying the application for Abaloparatide-SC, Ward said he wanted to be “respectful for what the overall work-life balance might be across our whole supply chain.” Rushing to complete the U.S. regulatory application before the end of the year — a self-imposed deadline Radius had given investors — “might unintentionally create risk,” he said.
Radius made the decision after looking at many factors including stress on its employees, said Barbara Ryan, a company spokeswoman. But she said its primary consideration was to give everyone the time needed to get the application done in a very careful manner and get approval from the FDA rather than hew to a “self- inflicted timeline.”
“It’s absolutely critical that we get this right, and that we get this right the first time,” Ryan said. “We had a plan whereby we could achieve our self-induced plan to file, register or submit our NDA by the end of the year. But what it would require is basically that people work tirelessly every day, day and night, through the end of the year to do that — and that’s a lot to ask.”
The decision is surprising because Abaloparatide-SC would be the company’s first approved drug and is vital to its future, said Jason McCarthy, an analyst at Maxim Group.
“This is a blockbuster, essentially a billion-dollar drug, and you’re going to tell me that it’s Thanksgiving and we’re going to push it off another half a year? I don’t know. I would take what they said with caution,” McCarthy said. “Your spidey sense is on, you can smell that something doesn’t seem right.”
High-tech and biotechnology companies are especially careful about treating their employees well, according to Carol Sladek, a human resources consultant at Aon Hewitt who focuses on work-life balance. Even so, she said, Radius’s approach seemed out of the ordinary, though she said she didn’t know the company specifically.
“There is a lot of focus from managers and from employers overall saying, ‘Go take time to be with your family,’ ” around this time of year, Sladek said. “This specific issue, delaying the FDA filing, I would say that’s more unique and unusual.”