Shares of Osmotica Pharmaceuticals plunged 25% in Tuesday’s after-market trading after the US Food and Drug Administration (FDA) issued a Complete Response Letter (CRL) regarding the company’s New Drug Application (NDA) for Arbaclofen.
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Osmotica’s (OSMT) NDA was expected to show the clinical efficacy and safety of arbaclofen tablets used in the treatment for patients with spasticity due to multiple sclerosis. Spasticity refers to the condition of stiffening muscles thereby affecting movement, speech and gait.
Meanwhile, the FDA’s letter specified that the company did not provide an adequate explanation for the statistical analysis of the change from the starting point to Day 84 in TNmAS-MAL scores comparing arbaclofen 40 mg to placebo.
The TNmAS is a 6-point rating scale for measuring abnormality in tone or the resistance to passive movements and considered the primary clinical measure of muscle spasticity in subjects with neurological conditions.
The FDA made a number of recommendations in its CRL, including the conduct of a new study in order to provide substantial evidence of efficacy of arbaclofen. The company said that it plans to review the CRL with its advisors and request a meeting with the FDA to discuss their recommendations.
OSMT stock has lost 24.3% on year-to-date basis. (See OSMT stock analysis on TipRanks)
Last month, RBC Capital analyst Randall Stanicky reiterated a Buy rating on the stock with a price target of $12.
The price target of $12 implies 127% upside potential at current levels.
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