DURECT Corporation (DRRX) Stock Falls On AdComm Vote

DURECT Corporation DRRX Stock News

DURECT Corporation (NASDAQ: DRRX) is having a rough start to the trading session this morning, falling more than 16% early on. The declines are the direct result of an event that we announced last Thursday would be coming. Here’s what’s going on:

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DRRX Stock Dives As Split Advisory Committee Hands Down Vote

In a press release issued this morning, DURECT Corporation said that the United States Food and Drug Administration’s Anesthetic and Analgesic Drug Products Advisory Committee provided their view of POSIMIR in an Advisory Committee Meeting.

While DRRX said that the advisory committee “voted to recommend that the efficacy, safety and overall risk-benefit profile of POSIMIR support approval,” the vote was split. Moreover, I’m a bit confused here.

In the release, the company said that six of the members of the advisory committee did not vote in support of approval. However, according to the FDA’s own website, there are only 11 members of this committee! Doing the math tells us that if 6 of the 11 members voted against approval, the overall vote would be a rejection. The only other way this math works is if some of the members either missed the meeting or simply did not vote one way or another.

Nonetheless, DRRX did say that the advisory committee voted to support the approval of the post-operative pain reliever. Of course, the advisory committee does not hand down the final approval or rejection, but their views are heavily considered when the FDA makes these decisions.

In a statement, James E. Brown, President and CEO at DURECT, had the following to offer:

We appreciated this opportunity to present an in depth overview of our POSIMIR data and discuss it with the committee. We are encouraged by the support from a number of the Committee members. We continue to believe the data meets all of the regulatory requirements and that the weight of the evidence supports approval. We look forward to working with the agency as it completes its review of the POSIMIR application.

Why Is The Stock Tumbling If The Vote Was For Approval

First and foremost, it’s important to keep in mind the comment mentioned above. The vote was mixed, and very close to rejection. That’s a big hit to the company. The truth is that the advisory committee doesn’t make the final decision and history tells us three things:

  1. Landslide Approval Vote – When the advisory committee’s provide a landslide vote for approval, we generally see approval in the drug.
  2. Mixed Vote – The closer the committee is to an even split, the stronger the chance of rejections.
  3. Landslide Rejection Vote – When the advisory committee votes in a landslide to reject a drug, that is generally the outcome.

With such a mixed vote handed to DRRX, there is fear that POSIMIR is going to be rejected. Of course, this is concerning investors, leading to declines.

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