UPDATE: Columbia Laboratories (CBRX) dives 54% after FDA says drug doesn't work

"Columbia Laboratories Inc. (CBRX) fell the most in almost five years after U.S. regulators said the company’s progesterone gel to reduce the risk of preterm birth isn’t effective"

Columbia Labs dropped 54 percent to $1.10 at the close in New York, the biggest single-day decline since Feb. 5, 2007. Watson Pharmaceuticals Inc. (WPI), a partner on the drug, fell 6.8 percent to $57.98, the greatest single-day loss in almost three years.


“The information and data in this application do not support the efficacy of progesterone gel compared with placebo in reducing the risk of preterm births before 33 completed weeks,” Food and Drug Administration staff wrote in a Dec. 22 report released today.
The product would compete with KV Pharmaceutical Co. (KV/A)’s gel Makena, approved in February 2010. KV rose 6.2 percent to $1.89.


The FDA staff based its determination on data from narrow groups in a global study, said Amy Raskopf, a spokeswoman for Livingston, New Jersey-based Columbia Labs.


“This is a global study,” she said in a telephone interview. “It was designed as a global study. FDA agreed.”


An FDA advisory panel is set to meet Jan. 20 on Columbia Lab’s gel and weigh the risks and benefits. The agency isn’t required to follow the panel recommendations.


Not Statistically Significant
Of U.S. patients, 16.8 percent using the gel experienced preterm birth at 33 weeks of pregnancy, the endpoint the company and the agency agreed on, compared with 19.2 percent using placebo, not a statistically significant difference, FDA staff said.


“It does not appear that the applicant has identified a population of U.S. women who are likely to benefit from the use of progesterone gel to reduce their risk of preterm birth,” FDA staff wrote.


Columbia Labs said its gel was associated with a statistically significant reduction in preterm birth compared with placebo of 8.9 percent versus 15.2 percent in 465 pregnant women from 10 countries, according to a document from the company.


Preterm birth affects 10 percent to 12 percent of all pregnancies in the U.S., with an economic impact of $26 billion annually, according to the company.


The safety of Columbia Lab’s gel was similar to placebo, according to the FDA staff report. There were no maternal deaths in either the group using the gel or the placebo and the rates of fetal, neonatal and infant deaths were similar.


Source: Bloomberg


Trading Roadmap
Since the actual panel vote will not take place until Friday (1/20), there could be a bounce ahead of that date as traders bet on the possibility of a surprise positive recommendation by the FDA panel. However, this is risky and should only be pursued with extreme caution. Given the current status of the stock, playing the 'slide' on a surprise positive panel outcome would be a better strategy. Feel free to follow me on Twitter (@MichaelJuan01) for trading updates. Good luck!